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The Mortgage Market as a Stimulus Channel in the Covid-19 Crisis

Edward Golding, Laurie Goodman, Richard Green, Susan Wachter
The COVID-19 crisis has pushed unemployment to its highest level since the Great Depression, and, at the time of this writing, the economy is in a deep recession. In past financial downturns, the mortgage market has worked to counter downturns, with lower interest rates passed through to households through lower mortgage rates, acting as an important countercyclical force. This paper documents the current impact of legislative and monetary policy on mortgage markets, explaining their countercyclical limitations and offers additional policy responses.