Obviously, as households take on more housing debt, they react faster and more strongly to interest rate movements, thus allowing the Central Bank through their interest rate policy to have a greater influence on macroeconomic activity. A faster and fuller pass-through of interest rates facilitates the conduct of monetary policy and enhances its effectiveness.
In this context much depends on whether mortgages are with fixed or floating interest rates. Countries, of course, differ widely on this, for historical, legal or other reasons. Whether the expansion of the mortgage market is responsible for the often-observed significant increases in housing prices is a moot point.