Responses to Eliminating Saving Commitments: Evidence from Mortgage Run-offs

Steffen Andersen, Philippe d’Astous, Jimmy Martínez-Correa, Stephen H. Shore*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


We study consumers’ responses to removing a saving constraint. Mortgage run-offs predictably relax a saving constraint for borrowers whose mortgage committed them to save by paying down principal. Using the entire Danish population, we identify mortgages on track to run off between 1995 and 2014. We measure the effect of run-offs on earnings and the household balance sheet. We find that borrowers use 39% of previous mortgage payments to decrease labor income and use 53% to pay down other debts. Borrowers run up nonmortgage debt prior to the run-off and this run-up stops once the mortgage is repaid.
Original languageEnglish
JournalJournal of Money, Credit and Banking
Issue number5
Pages (from-to)1369-1405
Number of pages37
Publication statusPublished - Aug 2022

Bibliographical note

Published online: 13 December 2021.


  • Saving commitments
  • Permanent income hypothesis
  • Mortgage run-offs

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