Monetary Policy and Home Buying Inequality

48 Pages Posted: 5 Feb 2023

See all articles by Daniel Ringo

Daniel Ringo

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: January, 2023


Does monetary policy influence who becomes a home owner? Home purchases by low- and moderate-income households may be particularly sensitive to mortgage interest rates, as these households’ budgets are tighter and they more frequently come up against binding payment-to-income ratio constraints in credit decisions. Exploiting the timing of high-frequency observations of mortgage applicants locking in their interest rates around monetary policy shocks, I find that a 1 percentage point policy-induced increase in mortgage rates lowers the presence of low-income households in the population of home buyers by 1 percentage point, and of low- and moderate-income households by 2 percentage points, immediately following the shock. Effects are substantially stronger among first-time home buyers, and persist for approximately one year.

Keywords: Home ownership, Inequality, Monetary policy, Interest rates, Credit constraints

JEL Classification: G21, E43, E44, R21

Suggested Citation

Ringo, Daniel, Monetary Policy and Home Buying Inequality (January, 2023). FEDS Working Paper No. 2023-6, Available at SSRN: or

Daniel Ringo (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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