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I am an Assistant Professor at Aarhus University, and I am affiliated with Knut Wicksell Centre for Financial Studies. My research is in the intersection of finance and macroeconomics, where I use microdata to study consumption, housing and mortgages. I also do work in alternative work arrangements and in the effect of social networks on investment behaviour.

If you have any links that would be useful for PhD students or junior researchers, please let me know!

Contact information

claes.backman@econ.au.dk

Telephone: 0046 76 308 2404

The Impact of IO Mortgages on Affordability

Regional Science and Urban Economics

We show that the legalisation of interest-only (IO) mortgage had no impact on homeownership rates in Denmark. IO mortgages made up approximately 60 percent of outstanding mortgage debt, with similar shares across the age, wealth and income distribution. We argue that the mortgage reform led to an increase in purchasing power across all buyers, leading to no change in who purchased housing. Instead, house prices rose, negating any positive impact on affordability.

No impact on homeownership rates after mortgage reform in 2003 (red line)


Interest-Only Mortgages and Consumption Growth: Evidence from a Mortgage Market Reform

We use detailed household-level data from Denmark to analyze how the introduction of interest-only mortgages affected consumption expenditure and borrowing. Four years after the reform interest-only mortgages constituted 40 percent of outstanding mortgage debt. Using an ex-ante measure of exposure motivated by financial constraints, we show households who are more likely to use an IO mortgage, increased consumption substantially following the reform. The increase in consumption is driven by borrowing at the time of refinancing and by borrowers with lower pre-reform leverage ratios. Our results show changes in the mortgage contract can have large impacts on consumption expenditure.