TY  - JOUR
AU  - Amromin, Gene
AU  - Bhutta, Neil
AU  - Keys, Benjamin J
TI  - Refinancing, Monetary Policy, and the Credit Cycle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 28039
PY  - 2020
Y2  - October 2020
DO  - 10.3386/w28039
UR  - http://www.nber.org/papers/w28039
L1  - http://www.nber.org/papers/w28039.pdf
N1  - Author contact info:
Gene Amromin
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604-1413
Fax: Financial Economist
E-Mail: gamromin@frbchi.org

Neil Bhutta
Federal Reserve Board
20th and C St N
Stop 149
Washington, DC 20551
E-Mail: neil.bhutta@frb.gov

Benjamin J. Keys
Department of Real Estate
The Wharton School
University of Pennsylvania
432 Vance Hall
3733 Spruce Street
Philadelphia, PA 19104
Tel: 215-746-1253
E-Mail: benkeys@wharton.upenn.edu
AB  - We assess the complicated reality of monetary policy transmission through mortgage markets by synthesizing the existing literature on the role of refinancing in policy implementation. After briefly reviewing mortgage market institutions in the U.S. and documenting refinance activity over time, we summarize the links between refinancing and consumption, and describe the frictions impeding the refinancing channel. The paper draws heavily on research emerging from the experience of the financial crisis of 2008-09, as it highlights a combination of market, institutional, and policy-making factors that dulled the transmission mechanism. We conclude with a discussion of potential mortgage market innovations, and the applicability of lessons learned to the ongoing stresses induced by the COVID-19 pandemic.
ER  -