freely adjust outstanding debt (refinancing) and (ii) dominant mortgage type in the economy (fixed or adjustable rate). I … their disposable income (hand-to-mouth) net of payments on long-term mortgage. I find that the optimal simple policy rule … significantly depends on the ability to adjust debt and on mortgage type. Policy prescriptions based on models not accounting for …

Housing and mortgage choices are among the largest financial decisions households make and they substantially impact … prices. I find that, although only a small fraction of households adjust their housing and mortgage holdings in response to …. Mortgage refinancing explains approximately four‐fifths of the contribution, whereas adjusted housing choices account for one …