Arbeitspapier

Loan types, leverage, and savings behaviour of Danish households

Using Danish household level data, we find that a relatively large share of total interest-only mortgage debt is held by families with few liquid assets and high loan to value ratios. This may arise because families with interest-only loans do not fully use the lower instalments to increase their savings or to amortise more expensive debt. This is in particular the case for the families who choose interest-only loans with a variable interest rate, which is the most common loan type in Denmark, and the largest difference is found for those families who have the lowest savings propensity, and those with a high loan to value ratio. Furthermore, first time borrowers choosing interest-only loans take loans of higher initial sizes and have higher loan to value ratios than first time borrowers choosing amortising loans.

Language
Englisch

Bibliographic citation
Series: Danmarks Nationalbank Working Papers ; No. 97

Classification
Wirtschaft
Household Saving; Personal Finance
Macroeconomics: Consumption; Saving; Wealth
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Housing Supply and Markets
Subject
Mortgage loans
loan types
savings
financial stability

Event
Geistige Schöpfung
(who)
Kuchler, Andreas
Event
Veröffentlichung
(who)
Danmarks Nationalbank
(where)
Copenhagen
(when)
2015

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Kuchler, Andreas
  • Danmarks Nationalbank

Time of origin

  • 2015

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