The Mortgage Piggy Bank: Building Wealth through Amortization

64 Pages Posted: 30 Apr 2020 Last revised: 10 Mar 2021

See all articles by Asaf Bernstein

Asaf Bernstein

University of Colorado at Boulder; National Bureau of Economic Research (NBER)

Peter Koudijs

Erasmus University Rotterdam

Multiple version iconThere are 2 versions of this paper

Date Written: March 2021


Mortgage amortization schedules are illiquid savings plans comparable in size to pension programs; however, little is known about their effects on wealth accumulation. Using individual administrative data and plausibly exogenous variation in the timing of home purchase (ex. childbirth-driven) around a 2013 Dutch reform, we find a near one-for-one rise in net worth for each dollar of amortization. Households leave other savings and liabilities unchanged, and instead increase labor supply and reduce consumption. Effects hold even for regular savers and older households. This has important macroprudential implications and suggests homeownership financed via amortizing mortgages is instrumental for household wealth building.

Keywords: Mortgage, Amortization, Wealth, Fungibility, Homeownership, Macroprudential policies

JEL Classification: G4, G5, G19, G21, G51, J3, R2

Suggested Citation

Bernstein, Asaf and Koudijs, Peter, The Mortgage Piggy Bank: Building Wealth through Amortization (March 2021). Stanford University Graduate School of Business Research Paper No. 3569252, Available at SSRN: or

Asaf Bernstein (Contact Author)

University of Colorado at Boulder ( email )

Campus Box 419
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Peter Koudijs

Erasmus University Rotterdam ( email )

Burgemeester Oudlaan 50
Rotterdam, 3062PA


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