The FOMC and the Mortgage Market

42 Pages Posted: 7 May 2019

See all articles by Marco Giacoletti

Marco Giacoletti

Marshall School of Business

Rodney Ramcharan

University of Southern California, Marshall School of Business

Edison Yu

Federal Reserve Bank of Philadelphia

Date Written: March 19, 2019

Abstract

Using daily data on mortgage applications from over two decades, this paper shows that applications increase sharply in the days just before the Federal Open Market Committee (FOMC) meetings, and decline sharply in the days after the FOMC. Bond market uncertainty also increases in the days before these meetings. And the evidence shows that this increase in bond market uncertainty helps explain the rise in applications, as risk averse households rush to contract ahead of the meeting, rather than gamble on interest rate outcomes after the FOMC meeting.

Keywords: Monetary Policy, FOMC, Uncertainty, Housing Market, Mortgage Application

JEL Classification: E52, E58, G21

Suggested Citation

Giacoletti, Marco and Ramcharan, Rodney and Yu, Edison, The FOMC and the Mortgage Market (March 19, 2019). Available at SSRN: https://ssrn.com/abstract=3364588 or http://dx.doi.org/10.2139/ssrn.3364588

Marco Giacoletti

Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Rodney Ramcharan

University of Southern California, Marshall School of Business ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

HOME PAGE: http://https://sites.google.com/site/rodneyramcharan/

Edison Yu (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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