Unequal Effects of Interest Rate Hikes: Renters, Homeowners, and Wealth Disparities

 This study examines how rapid interest rate increases affect housing cost burdens across income and tenure groups in the Eurozone (2022–2025). Using granular household survey data and a difference-in-differences design, we show that tighter monetary policy raises rental inflation faster than mortgage costs, as landlords pass on higher financing costs while new homebuyers withdraw from the market. Lower-income renters spend up to 42% of disposable income on housing after a 400 bps rate hike, compared with a 6% increase for fixed-rate mortgage holders. Moreover, rising rates depress home prices, disproportionately reducing the net worth of younger, first-time buyers while leaving older, equity-rich homeowners largely shielded. The findings challenge the neutrality of conventional monetary tightening and call for targeted rental assistance and countercyclical housing policies.