00000nam 2200000zi 4500 9.887722 CaOODSP 20221107171803 m o d f cr |n||||||||| 200525t20202020oncd ob f000 0 eng d CaOODSP eng rda CaOODSP eng fre n-cn--- FB3-5/2020-18E-PDF Kartashova, Katya, author. How do mortgage rate resets affect consumer spending and debt repayment? Evidence from Canadian consumers / by Katya Kartashova and Xiaoqing Zhou. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 1 online resource (2, 56 pages) : graphs (mostly colour). text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-18 Cover title. Includes bibliographical references (pages 32-34). "We study the causal effect of mortgage rate changes on consumer spending, debt repayment, and defaults during an expansionary and a contractionary monetary policy episode in Canada. Our identification takes advantage of the fact that the interest rates of short-term fixed-rate mortgages (the dominant product in Canada’s mortgage market) have to be reset according to the prevailing market interest rates at predetermined time intervals. Our empirical strategy exploits this exogenous variation in the timing of mortgage rate resets. We find asymmetric responses of consumer durable spending, deleveraging, and defaults. These results can be rationalized by the cash-flow effect in conjunction with changes in consumers’ expectations about future interest rates. Our findings help us to understand the responses of the household sector to changes in the interest rate, especially in countries where variable-rate, adjustable-rate, and short-term fixed-rate mortgages are prevalent"--Abstract, page 2. Includes abstract in French. Mortgages Rates Canada. Consumption (Economics) Canada. Debt Canada. Hypothèques Tarifs Canada. Consommation (Économie politique) Canada. Dettes Canada. Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2020-18. (CaOODSP)9.806221 PDF 753 KB https://publications.gc.ca/collections/collection_2020/banque-bank-canada/FB3-5-2020-18-eng.pdf