The Response of Debtors to Rate Changes

Andreas Fuster, Virginia Gianinazzi, Andreas Hackethal, Philip Schnorpfeil and Michael Weber
Additional contact information
Andreas Fuster: École Polytechnique Fédérale de Lausanne (EPFL); Swiss Finance Institute; Centre for Economic Policy Research (CEPR)
Virginia Gianinazzi: Nova School of Business and Economics; Università della Svizzera italiana (USI), Lugano; Swiss Finance Institute
Andreas Hackethal: Goethe University Frankfurt; Leibniz Institute for Financial Research SAFE
Philip Schnorpfeil: Goethe University Frankfurt
Michael Weber: National Bureau of Economic Research (NBER); Purdue University - Daniels School of Business

No 26-11, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: How borrowers respond to future changes in the interest rate on their debt matters for the transmission of monetary policy and for household financial stability. Combining bank data, a letter RCT, and a survey, we study this question in the context of the German mortgage market, where since 2022 borrowers have faced high interest rates when their rate fixation period ends. We find that borrower actions substantially reduce the impact of higher rates on monthly payments. Survey responses corroborate high informedness and a strong propensity to prepare for rate changes. The letter intervention does not affect rate beliefs but increases awareness of available options and refinancing among borrowers close to expiration of their rate fixation.

Keywords: Mortgages; Refinancing; Interest rates; Survey; RCT (search for similar items in EconPapers)
Pages: 86 pages
Date: 2026-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5344559 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2611

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().