Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297456 
Authors: 
Year of Publication: 
2024
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2024-8
Publisher: 
Bank of Canada, Ottawa
Abstract: 
I investigate how monetary policy transmits to mortgage rates via the mortgage market concentration channel for both traditional and shadow banks in the United States from 2009 to 2019. On average, shadow and traditional banks exhibit only a slight disparity in transmitting monetary shocks to mortgage rates. Nonetheless, in highly concentrated mortgage markets, shadow banks transmit marginally 35 basis points (bps) more, whereas traditional banks transmit marginally 25 bps less in response to a monetary policy surprise of more than 100 bps. Lastly, banks serve different parts of the mortgage rate distribution: (i) fintech lenders compete with traditional banks for the highest rates, (ii) traditional banks target primarily the middle of the mortgage rate distribution, and (iii) non-fintech lenders specialize in the lowest rates by transmitting monetary policy the least.
Subjects: 
Financial institutions
Interest rates
Monetary policy transmission
JEL: 
E44
E52
G21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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