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Households avoid mortgages as higher rates bite harder

Higher interest rates weighed sharply on households’ demand for mortgages in Q3 and banks expect demand for mortgages to fall further in Q4. This is a clear sign that higher interest rates are working. And our forecast that mortgage rates will stay above 5% until late in 2024 suggests that the weakness in bank lending will weigh more heavily on real activity in the coming quarters.

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