Séminaires d'économie 2026/2027
[E] Savings Choices in Household Debt Decisions
Le 24 sept. 2026 de 13h00 à 14h00
Morgane RICHARD, MC à Sciences Po Paris.
En visioconférence TEAMS accessible en salle des thèses à Pau et en salle 110 à Bayonne.
Abstract :
This paper examines household saving decisions during mortgage origination using
loan-level observations from Crédit Logement (1996-2021). We document a U-shaped
relationship between loan-to-value (LTV) ratios and income: higher income increases
LTV at the bottom and top of the distribution, but reduces it in the middle. We iden-
tify four mechanisms driving this pattern: an income constraint channel at the bottom,
where higher income relaxes flow constraints on mortgage payments, a precautionary
savings motive that pushes households to preserve liquid wealth, a cost minimization
channel in the middle, where households cross LTV thresholds to reduce interest rates,
and an alternative investment opportunities channel at the top, where wealthy house-
holds exploit arbitrage between mortgage rates and risky asset returns. We develop
a dynamic incomplete markets overlapping generations model that rationalizes these
empirical patterns and quantifies the relative importance of each channel. Our findings
reveal substantial heterogeneity in household responses with important implications
for macroeconomic policy transmission.