FRANKFURT, July 16 (Reuters) - The impact of monetary policy on private consumption is bigger if mortgage interest rates float and home equity loans are widely available, European Central Bank research said on Thursday.
The more advanced mortgage markets a country has, the more responsive house prices in that country are to monetary policy shocks, the study added.
"Residential investment and house prices are usually more responsive to policy shocks in those countries with more developed/flexible mortgage markets," the study said.
"As for consumption, it is really two indicators that matter: the possibility of mortgage equity release and the prevailing interest rate structure of mortgage contracts."
The findings contrast with the assumption that more developed and flexible mortgage markets should help smooth consumption over the business cycle.
The study, which was published by the ECB, but has not been formally endorsed by it, looked at 19 countries, including the United States, Japan, Australia and 9 euro-zone countries.
It said mortgage markets within the euro zone are widely different from each other, meaning the transmission of monetary policy was not uniform across the common currency zone.
Mortgage markets in many euro-zone countries were less developed than in other industrialised countries, it added, but did not publish individual country data.
The research paper was written by Alessandro Calza, Tommaso Monacelli and Livio Stracca. (Reporting by Sakari Suoninen; Editing by Toby Chopra)