The paper describes the results of estimation of a factor-augmented vector autoregressive model that relates the
markup on mortgage loans in national currency, granted to households by monetary financial institutions, and 1-month
inter-bank rate that represents the cost of funds for financial institutions. The factors by which the
model is augmented, summarize information that can be used by banks to forecast interest rates and evaluate
macroeconomic risks. The estimation results indicate that there is a significant relation between the markup
and the changes in 1-month WIBOR. This relation can be interpreted as evidence of incomplete transmission of
the monetary policy shocks to mortgage rates set by monetary financial institutions. The policy shocks are partially
absorbed by changes in the markup