How Do Interest-Only Mortgages Affect Consumption and Saving over the Life Cycle?

• 成果类型: Article
• 署名作者: Larsen, Linda Sandris; Munk, Claus; Nielsen, Rikke Sejer; Rangvid, Jesper
• 署名单位: Copenhagen Business School
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4787
• 发表日期: 2024
• 页码: 1970-1991
• 关键词: interest-only mortgages; Micro data; consumption and savings pattern; life cycle planning; financial constraints

摘要

Using a unique data set with detailed information on Danish households and their mortgages, we show that young and old households are more likely to use interestonly (IO) mortgages compared with middle-aged households. Young households use IO mortgages because they expect higher future income and old households because IO mortgages allow them to circumvent an otherwise binding liquidity constraint. Through different channels, IO mortgages thus facilitate consumption smoothing for young and old households. Our detailed data also allow us to examine how households with IO mortgages differ from households with repayment mortgages in terms of leverage, debt and asset composition, and pension contributions.