Refinancing Advertising and the Last Mile of Monetary Policy

When interest rates fall, mortgage refinancing is a key channel through which monetary policy reaches household balance sheets. Yet many borrowers fail to refinance even when doing so would yield substantial savings, creating a “last-mile” problem for monetary stimulus. We study whether mass-market television advertising by mortgage lenders can improve the pass-through of rate cuts to households. Using a comprehensive dataset that links television advertising exposure to mortgage origination and performance data from HMDA, Freddie Mac, and Equifax, we find that advertising increases refinancing precisely where interest-rate savings are largest and has no detectable effect where they are not. The effects are economically large relative to advertising costs, suggesting that privately motivated lender advertising generates substantial social returns in the form of increased interest-rate pass-through. We further show that advertising operates symmetrically across income groups at the awareness stage, but pre-existing downstream frictions cause higher-income borrowers to convert initial engagement into completed refinancing at higher rates, resulting in lower realized gains for lower-income households.