Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/227868
Authors: 
Andersen, Henrik Yde
Bech, Stine Ludvig
Year of Publication: 
2020
Series/Report no.: 
Danmarks Nationalbank Working Papers No. 150
Publisher: 
Danmarks Nationalbank, Copenhagen
Abstract: 
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.
Subjects: 
Interest-only
Mortgages
Consumption
JEL: 
D15
E21
G51
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.