Spending Response to a Predictable Increase in Mortgage Repayments: Evidence from Expiring Interest-Only Loans

• 成果类型: Article
• 署名作者: de Andersen, Henrik Y.; Bech, Stine Ludvig; De Stefani, Alessia
• 署名单位: International Monetary Fund
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_01146
• 发表日期: 2024-01
• 页码: 277-285
• 关键词: household consumption; income; payment; WEALTH

摘要

We study how homeowners' consumption responds to a negative and anticipated disposable income shock: the beginning of the amortization 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% of income, consumption drops by 3% of income, when amortization begins. The reduction in expenditure is persistent. Borrowers who fail to smooth consumption are highly leveraged and likely to be denied a new interest-only loan, upon expiration.