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Working Paper
Locked In: Mobility, Market Tightness, and House Prices
Rising interest rates in 2022 significantly increased moving costs for homeowners with low fixed-rate mortgages, leading to a sharp drop in mobility. After accounting for biases from selective refinancing, we find mortgage rate "lock in"– the decline in moves due to the rising gap between market rates and homeowners' fixed rates– explains 44 percent of the drop in mortgage borrower mobility from 2021 to 2022. This effect primarily reflects fewer local moves, with only modest impacts on moves across labor market areas. Consistent with a housing search model, we show that under certain ...
Discussion Paper
Excess Savings during the COVID-19 Pandemic
Over the pandemic, historic levels of government transfers boosted household income while household spending was severely curtailed by social distancing. This led the personal saving rate to soar (Figure 1), and we estimate that U.S. households accumulated about $2.3 trillion in savings in 2020 and through the summer of 2021, above and beyond what they would have saved if income and spending components had grown at recent, pre-pandemic trends.
Discussion Paper
Greater Wealth, Greater Uncertainty: Changes in Racial Inequality in the Survey of Consumer Finances
We document racial disparities in financial well-being in the 2022 Survey of Consumer Finances. The typical White family had about six times as much wealth as the typical Black family, and five times as much as the typical Hispanic family.
Discussion Paper
How Much Does Home Equity Extraction Matter for Spending?
In this note, we investigate recent trends in home equity extraction and how these trends may have impacted household spending and residential improvements. Home equity extractions—which rose and fell with house prices in the 1990s and 2000s—have remained sluggish in the recovery despite low interest rates and gains in home equity. Compared to the mid-2000s, equity extractions have fallen especially among younger households and those with lower credit scores and higher leverage, suggesting that mortgage credit supply is likely tighter than before the recession, at least for portions of ...
Working Paper
Locked In: Rate Hikes, Housing Markets, and Mobility
Rising interest rates in 2022 introduced large moving costs for homeowners with low, fixed-rate mortgages. Using a novel dataset linking mortgage loans, consumer credit profiles, and property sales, we examine the effects of rate hikes on household mobility and the broader economic impacts of the resulting mortgage rate lock-in. As market rates rise relative to those on borrowers’ existing loans, likelihood of moving falls with the highest elasticity among borrowers just “in the money.” Our results suggest about 44% of the decline in moves among mortgage holders between 2021 and 2022 ...
Discussion Paper
Wealth Inequality and the Racial Wealth Gap
In the United States, the average Black and Hispanic or Latino households earn about half as much as the average White household and own only about 15 to 20 percent as much net wealth. As we see in Figure 1 below, this wealth gap has widened notably over the past few decades.