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The Effect of Fed Funds Rate Hikes on Consumer Borrowing Costs

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Abstract

The target federal funds rate has hovered around zero for nearly a decade, and observers are questioning what effect an increase could have on both the financial markets and the real economy. In this post, we examine the historical reaction of loan rates to target rate increases. Specifically, we examine the interest rates that banks offer on residential mortgages and home equity lines of credit (HELOCs).

Suggested Citation

  • Nina Boyarchenko & Sooji Kim & Matthew Plosser, 2015. "The Effect of Fed Funds Rate Hikes on Consumer Borrowing Costs," Liberty Street Economics 20151221, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87085
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    More about this item

    Keywords

    Federal Funds; Consumer Lending; Monetary Policy; Taper Tantrum;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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