Arbeitspapier
Mortgage choice and expenditure over the lifecycle: Evidence from expiring interest-only loans
We study how homeowners' consumption responds to a negative and anticipated disposable income shock: the beginning of the amortisation period on interest-only mortgages. We identify spending behavior through an event study approach, by matching loan-level data that covers the universe of Danish mortgages to detailed administrative registries on borrowers. In response to an average increase in installments worth 9 percent of income, consumption drops by 3 percent of income, in the year when amortisation begins. The reduction in expenditure is persistent. Borrowers who fail to smooth consumption are highly leveraged, handto- mouth consumers, likely to be unable to obtain a new interest-only loan.
- Sprache
-
Englisch
- Erschienen in
-
Series: Danmarks Nationalbank Working Papers ; No. 150
- Klassifikation
-
Wirtschaft
Intertemporal Household Choice; Life Cycle Models and Saving
Macroeconomics: Consumption; Saving; Wealth
- Thema
-
Interest-only
Mortgages
Consumption
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Andersen, Henrik Yde
Bech, Stine Ludvig
- Ereignis
-
Veröffentlichung
- (wer)
-
Danmarks Nationalbank
- (wo)
-
Copenhagen
- (wann)
-
2020
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Andersen, Henrik Yde
- Bech, Stine Ludvig
- Danmarks Nationalbank
Entstanden
- 2020
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