Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/338381 
Year of Publication: 
2026
Series/Report no.: 
CESifo Working Paper No. 12417
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
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.
Subjects: 
mortgages
refinancing
interest rates
survey
RCT
JEL: 
C93
D14
E52
G21
G41
Document Type: 
Working Paper
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