Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297055 
Year of Publication: 
2024
Series/Report no.: 
Danmarks Nationalbank Working Papers No. 204
Publisher: 
Danmarks Nationalbank, Copenhagen
Abstract: 
Interest-only mortgages (IOMs) were popular before the 2007-2008 financial crisis, e.g. in the US and UK, and remain common in a few countries today, including the Netherlands, Sweden and Denmark. We use Danish administrative data, covering all mortgage loans originated between 2010 and 2019, to compare savings and spending of IOM borrowers to that of non-IOM borrowers using their mortgage origination year in an event study design. Conditional on time and individual fixed effects, we show that homeowners aged 50 and above increased spending in connection with taking out an IOM, while homeowners below this age predominantly accelerated non-mortgage debt repayments.
Subjects: 
Mortgage
interest-only
deferred amortisation
savings behaviour
JEL: 
G51
D14
Document Type: 
Working Paper

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