Working Papers, School of Business, Örebro University
Households’ Mortgage-Rate Expectations: More Realistic than at First Glance?
() and Pär Österholm
Abstract: Household expectations of future mortgage rates elicited
over the last few years might appear unrealistically low. However, taking
explicit account of the high persistence in interest rates, we find that
Swedish households’ implied long-term expectation of mortgage rates is
around 4.7 percent. This number lines up well with the long-term
expectation that can be deduced from the Riksbank’s assessment of the repo
rate in the long run and the typical spread between the mortgage rate and
the repo rate. Our analysis makes use of household mortgage rate
expectations at three different horizons, which enables an explicit
modelling of the “term-structure” of household forecasts.
Keywords: Survey data; Household expectations; Mortgage rates.; (follow links to similar papers)
JEL-Codes: E40; G21; (follow links to similar papers)
12 pages, December 1, 2017
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