Saving Impact of Mortgage Payments: A Microlevel Study for the U.S. Households

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.