How Do Interest Rates Affect Consumption? Household Debt and the Role of Asset Prices

We thank support from Julis-Rabinowitz center for public policy and finance at Princeton University. UK residential mortgage data are taken from the Product Sales Data (PSD) provided by the UK Financial Conduct Authority (FCA). The PSD includes regulated mortgage contracts only, and therefore excludes other regulated home finance products such as home purchase plans and home reversions, and unregulated products such as second charge lending and buy-to-let mortgages. This paper contains the views of the authors and not necessarily those of the Bank of England, the Monetary Policy Committee, the Financial Policy Committee, or the Prudential Regulation Committee. This paper was prepared under the European System of Central Banks ChaMP research network (Challenges for the Transmission of Monetary Policy in a Changing World). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.