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Saving Impact of Mortgage Payments: A Microlevel Study for the U.S. Households
Author(s) -
Güneş Ali,
Tunç Cengiz
Publication year - 2021
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.12265
Subject(s) - payment , economics , point (geometry) , instrumental variable , panel study of income dynamics , interest rate , panel data , monetary economics , principal (computer security) , floating interest rate , econometrics , demographic economics , finance , mathematics , geometry , computer science , operating system
This article investigates the effect of the mortgage payments on the saving rate of the U.S. households by employing instrumental variable‐based methods along with the Panel Study Income Dynamics data over the period of 1999–2015. The results show that a 1% increase in the mortgage payments leads to a 0.15‐percentage‐point (corresponding to an actual 8.8%) decrease in the saving rate. The significant depressing effect also prevails even when mortgage payment is decomposed into the principal and interest components. The finding evidence indicates that the changes in the saving rate of the U.S. households can be partially explained by the changes in mortgage payments.