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Household borrowing and monetary policy transmission; post-pandemic insights from nine European

Author

Listed:
  • Olivier De Jonghe

    (National Bank of Belgium)

  • Konstantīns Benkovskis

    (Latvijas Banka)

  • Karolis Bielskis

    (Bank of Lithuania)

  • Diana Bonfim

    (Banco de Portugal, Católica Lisbon School of Business & Economics)

  • Margherita Bottero

    (Banca d’Italia)

  • Tamás Briglevics

    (Central Bank of Hungary)

  • Martin Cesnak

    (National Bank of Slovakia)

  • Mantas Dirma

    (Bank of Lithuania)

  • Marina Emiris

    (National Bank of Belgium)

  • Pálma Filep-Mosberger

    (Central Bank of Hungary)

  • Valentin Jouvanceau

    (Bank of Lithuania)

  • Nicholas Kaiser

    (Central Bank of Ireland)

  • Dmitry Khametshin

    (Banco de España)

  • Viola M. Grolmusz

    (Central Bank of Hungary)

  • Laura Moretti

    (Central Bank of Ireland)

  • Artūrs Jānis Nikitins

    (Latvijas Banka)

  • Angelo Nunnari

    (Banca d’Italia)

  • Maria Rodriguez Moreno

    (Banco de España)

  • Elitsa Stefanova

    (European Central Bank)

  • Lajos Tamás Szabó

    (Central Bank of Hungary)

  • Kārlis Vilerts

    (Latvijas Banka)

  • Sujiao Emma Zhao

    (Banco de Portugal, Católica Lisbon School of Business & Economics)

Abstract

We study heterogeneity in households’ credit across nine European countries (Belgium, Spain, Hungary, Ireland, Italy, Latvia, Lithuania, Portugal, and Slovakia) during 2022-2024 using granular credit register data. We first document substantial between- and within-country variation in mortgage and consumer lending by borrower age, loan maturity, and interest rate fixation. We then quantify the pass-through of the ECB’s recent tightening cycle to household borrowing costs and assess its heterogeneous impact across households. Pass-through is nearly complete for mortgages (around 0.9) but considerably weaker for consumer credit (around 0.4). While mortgage pass-through is relatively homogeneous across countries, consumer credit shows pronounced cross-country differences that cannot be explained by borrower or loan characteristics. Younger households face stronger mortgage pass-through but weaker consumer credit pass-through relative to older borrowers, and longer maturities are associated with stronger pass-through in both credit markets.

Suggested Citation

  • Olivier De Jonghe & Konstantīns Benkovskis & Karolis Bielskis & Diana Bonfim & Margherita Bottero & Tamás Briglevics & Martin Cesnak & Mantas Dirma & Marina Emiris & Pálma Filep-Mosberger & Valentin J, 2025. "Household borrowing and monetary policy transmission; post-pandemic insights from nine European," Working Paper Research 485, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:202511-485
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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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