Interest-only Mortgages and Consumption Growth: Evidence from a Mortgage Market Reform

Publikation: KonferencebidragPaperForskningpeer review

Abstrakt

We use detailed household-level data from Denmark to analyze how the introduction of interest-only mortgages affected consumption expenditure and borrowing. Four years after the reform interest-only mortgages constituted 40 percent of outstanding mortgage debt. Using an ex-ante measure of exposure motivated by financial constraints, we show households who are more likely to use an IO mortgage, increased consumption substantially following the reform. The increase in consumption is driven by borrowing at the time of refinancing and by borrowers with lower pre-reform leverage ratios. Our results show changes in the mortgage contract can have large impacts on consumption expenditure.
OriginalsprogEngelsk
Publikationsdato2020
Antal sider43
StatusUdgivet - 2020
BegivenhedThe 55th AREUEA-ASSA Conference 2020 - San Diego, USA
Varighed: 3 jan. 20205 jan. 2020
Konferencens nummer: 55
https://www.areuea.org/conferences/details.phtml?id=117

Konference

KonferenceThe 55th AREUEA-ASSA Conference 2020
Nummer55
LandUSA
BySan Diego
Periode03/01/202005/01/2020
AndetJoint session with the American Economic Association (AEA) and a joint session with the American Finance Association (AFA)
Internetadresse

Citationsformater

Bäckman, C., & Khorunzhina, N. (2020). Interest-only Mortgages and Consumption Growth: Evidence from a Mortgage Market Reform. Afhandling præsenteret på The 55th AREUEA-ASSA Conference 2020, San Diego, USA.