Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322076 
Year of Publication: 
2025
Series/Report no.: 
ECB Working Paper No. 3053
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
I assess the impact of the recent hike in bank lending rates on euro area retail borrowers using a novel microsimulation framework that updates household-level data of a recent representative survey with up-to-date macro-financial information. The key novelty is that existing mortgages are gradually repaid, and new ones are extended, a feature necessary for medium-term simulations in a period of sizable credit growth. Since lending rates have increased, debt servicing has become more demanding, and the simulated share of distressed loans has increased. Effects are stronger for adjustable-rate mortgages, and especially for the most recent among them, but are present in all portfolios.
Subjects: 
monetary policy
financial stability
household finance
microsimulations
JEL: 
C1
G2
G51
E52
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-7231-4
Document Type: 
Working Paper

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