The Mortgage Piggy Bank: Building Wealth through Amortization
Abstract/Contents
- Abstract
- Mortgage amortization schedules are illiquid savings plans comparable in size to pension programs; however, little is known about their effects on wealth accumulation. Using individual administrative data and plausibly exogenous variation in the timing of home purchase (ex. childbirth-driven) around a 2013 Dutch reform, we find a near one-forone rise in net worth for each dollar of amortization. Households leave other savings and liabilities unchanged, and instead increase labor supply and reduce consumption. Effects hold even for regular savers and older households. This has important macroprudential implications and suggests homeownership financed via amortizing mortgages is instrumental for household wealth building.
Description
| Type of resource | text |
|---|---|
| Date created | August 26, 2021 |
Creators/Contributors
| Author | Bernstein, Asaf |
|---|---|
| Author | Koudijs, Peter |
| Organizer of meeting | Matvos, Gregor |
| Organizer of meeting | Seru, Amit |
Subjects
| Subject | mortgage |
|---|---|
| Subject | amortization |
| Subject | wealth |
| Subject | fungibility |
| Subject | homeownership |
| Subject | macroprudential policies |
| Genre | Text |
| Genre | Working paper |
| Genre | Grey literature |
Bibliographic information
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- License
- This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).
Preferred citation
- Preferred citation
- Bernstein, A. and Koudijs, P. (2022). The Mortgage Piggy Bank: Building Wealth through Amortization. Stanford Digital Repository. Available at https://purl.stanford.edu/fx463ft2981
Collection
SITE Conference 2021
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