Working Paper

The Impact of Monetary Conditions on Bank Lending to Households


  • Győző Gyöngyösi
  • Steven Ongena
  • Ibolya Schindele
Publication Date

We study the impact of monetary conditions on the supply of mortgage credit by banks to households. Using comprehensive credit register data from Hungary, we first establish a “bank-lending-to-households” channel by showing that monetary conditions affect the supply of mortgage credit in volume. We then study the impact of monetary conditions on the composition of mortgage credit along its currency denomination and borrower risk. We find that expansionary domestic monetary conditions increase the supply of mortgage credit to all households in the domestic currency and to risky households in the foreign currency. Because most households are unhedged, bank lending in multiple currencies may involve additional risk taking. Changes in foreign monetary conditions affect lending in the foreign currency more than in the domestic currency, and also differ in their compositional impact along firm risk.


JEL Classification
E51, F3, G21

Key Words

  • Bank balance-sheet channel
  • foreign currency lending
  • household lending
  • monetary policy

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