Lower mortgage rates lead to increased auto purchases and improved credit standing.
Lower mortgage rates during the housing crisis led to decreased mortgage defaults, increased auto purchases, and improved household credit standing. The study used loan-level data to show that lower mortgage payments of $150 per month resulted in positive economic outcomes, especially for low-wealth borrowers. Regions with more exposure to mortgage rate declines experienced faster recovery in house prices, increased auto consumption, and employment growth, particularly in the non-tradable sector.