New SNSF grant awarded to Prof. Andreas Fuster

Following more than a decade of historically low interest rates, many major central banks initiated a rapid shift in their monetary policy stance in mid-2022 through a series of interest rate hikes. For mortgagors with an expiring fixed-rate mortgage, higher interest rates post-refinancing mean a persistent reduction in disposable income. In this study, we investigate how households respond to changes in mortgage payments upon refinancing and how they manage interest rate risk in anticipation of such a shock. Informed by prior studies, we expect large heterogeneity in mortgagors’ responses. To shed light on the drivers of behavior, we partner with a large German bank to run a large-scale field experiment and online surveys linked to administrative data on mortgagors.

The amount of the grant is 468,944 CHF for a duration of three years. The project partner is Philip Schnorpfeil at Goethe University Frankfurt.