Consumption effects of mortgage payment holidays: evidence during the Covid-19 pandemic

Staff working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 25 February 2022

Staff Working Paper No. 963

By Bruno Albuquerque and Alexandra Varadi

We use UK transaction-level data during the Covid-19 pandemic to study whether mortgage payment holidays (PH) can act as a mechanism for smoothing household consumption following negative aggregate shocks. Our results suggest that mortgage PH were accessed by both households with pre-existing financial vulnerabilities and by those with stronger balance sheets, including buy-to-let investors. We also find that the temporary liquidity relief provided by PH allowed liquidity-constrained households to maintain higher annual consumption growth compared to those non-eligible for the policy. Finally, we find that mortgage PH led to higher saving rates for more financially-stable households. 

Consumption effects of mortgage payment holidays: evidence during the Covid-19 pandemic

This is an online appendix to Staff Working Paper No. 963.

Appendix to Consumption effects of mortgage payment holidays: evidence during the Covid-19 pandemic

Give your feedback

Was this page useful?
Yes
No
Add your details...