We show that households reduce their borrowing in response to higher amortization payments (see figure), which we attribute to households viewing amortization payments as a cost. We use lifecycle model to explore the mechanisms and to think about the aggregate effects.

Interest-only mortgages went from 0 to 50 percent of **outstanding** mortgage debt, a remarkable transformation of the market. Danish borrowers really liked these products!

Very happy to see our paper on interest-only mortgages and house prices in the Journal of Urban Economics!

From 2003 to 2006, Danish house prices increased by 60 percent, in a robust regulatory design that limits housing speculation. This was a larger increase than in the US, Spain, or Ireland!

Here’s my puzzle: almost everything about investing has become easier over the past twenty years. Index funds, the internet to search for info, lower fees, etc. None of that seems to have led to higher participation. That seems strange.

You can also ask Claude to convert a picture of a table to Latex code. (You all get to follow along in my teaching preparation)

Nice way to use AI when making slides: drag a picture of a formula from a paper and ask Claude to give you the latex code:

On a mac: use cmd+shift+4 to take a picture. In Windows, use Windows logo key + Shift + S.

Here is my list. Let’s see if anyone replies!

Tomorrow Patrick Moran will talk about our paper at the AREUEA Virtual Seminar.

The paper is joint with Peter Van Santen, and studies how debt repayment schedules shape household borrowing, based on a policy reform ending IO mortgages for LTV ratios > 50%.

Link: us06web.zoom.us/webinar/regi...