Low federal funds rates transmitted to the housing boom through two channels: lowering adjustable-rate mortgage rates (about 30% of mortgages, a rising fraction, often at low teaser rates) which increased housing demand, and through the term structure feeding short rates into the long rates that 30-year mortgages depend on.
causalpending
Speaker
John TaylorEvidence Quote
“the low interest rate would make the raid on adjustable rate mortgages much lower so about 30 percent of the mortgages during this period were adjustable rate... at the teaser rates very low initial rates which would then rise later so that obviously reduced the cost of minor house and increase the demand moving up along the demand curve”
Created: 6/15/2026, 9:20:12 AM
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