We study how monetary conditions change the supply by banks of mortgage credit to households. We exploit the widespread presence of foreign currency mortgages in Hungary and study this country`s comprehensive credit registry. Changes in monetary conditions not only affect the supply of credit in volume, but also in its currency and risk composition. Hence, we establish a “bank-lending-to-households” channel of monetary policy that is heterogeneous. While the availability of foreign currency mortgages weakens the domestic bank-lending channel overall, weakly capitalized domestic banks relying on swap transactions for their foreign currency lending are more sensitive to changes in monetary conditions.
JEL codes: E51, F3, G21.
Keywords: Bank balance-sheet channel, household lending, monetary policy, foreign currency lending.