European Central Bank working paper finds near-complete mortgage rate pass-through but weaker consumer credit transmission across nine European credit registers

The European Central Bank published a working paper using a newly harmonised, loan-level dataset from nine national credit registers to assess how changes in benchmark rates affected households’ mortgage and consumer borrowing conditions during 2022–2024. The paper finds that pass-through from the ECB’s recent tightening cycle to rates on newly originated mortgages was nearly complete (around 0.9) and broadly uniform across countries, while pass-through to consumer credit was much weaker (around 0.4) and varied strongly across countries. The analysis documents substantial cross-country differences in contract structures, including maturities and interest rate fixation practices, and links these to the speed and distribution of transmission. Younger households faced stronger mortgage pass-through but weaker consumer credit pass-through than older borrowers, and longer maturities were associated with stronger pass-through in both markets; short-maturity mortgages behaved more like consumer loans with muted sensitivity. Consumer credit differences across countries remained pronounced even after controlling for borrower and loan characteristics, and monetary tightening widened interest rate dispersion in consumer credit, consistent with lenders differentiating pricing within otherwise similar contract groupings, while mortgage pricing remained comparatively uniform.