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As central banks around the globe rapidly raise interest rates, policymakers outside the U.S. may find they pack more punch in terms of curbing demand.

  • The reason boils down to the unique way Americans finance their homes.

Why it matters: Americans tend to take out mortgages with interest rates fixed over long periods, as much as 30 years. It means when the Fed tightens, most homeowners are unaffected.

  • That’s not the case in other countries in much of Europe, Australia and Canada, where spiking mortgage rates can result in higher monthly payments.

From the central bank’s point of view, rate rises can cool demand in a very direct way.

  • For example, the Reserve Bank of Australia did a sensitivity analysis showing that a 2.5 percentage point hike in rates caused an Australian family, with typical income and mortgage debt levels, to see monthly spare cash flow drop 13%.

Yes, but: That may be good for bringing down inflation, but it means economic pain for homeowners. The OECD warned recently that “low-income families in countries where households are highly indebted and variable-rate mortgages are widely used, such as some Nordic countries, could be particularly vulnerable” as rates rise.