Exploiting variation in the timing of resets of adjustable-rate mortgages (ARMs), we find that
a sizable decline in mortgage payments (up to 50 percent) induces a significant increase in
car purchases (up to 35 percent). This effect is attenuated by voluntary deleveraging.
Borrowers with lower incomes and housing wealth have significantly higher marginal
propensity to consume. Areas with a larger share of ARMs were more responsive to lower
interest rates and saw a relative decline in defaults and an increase in house prices, car …

Exploiting variation in the timing of resets of adjustable-rate mortgages (ARMs), we find that
a sizable decline in mortgage payments (up to 50 percent) induces a significant increase in
car purchases (up to 35 percent). This effect is attenuated by voluntary deleveraging.
Borrowers with lower incomes and housing wealth have significantly higher marginal
propensity to consume. Areas with a larger share of ARMs were more responsive to lower
interest rates and saw a relative decline in defaults and an increase in house prices, car …