Government Stimulus and Mortgage Payments during COVID-19: Evidence from the US Census Household Pulse Survey

Abstract

We investigated the impact of governmental stimulus payments and how they were employed by individuals—whether saved, spent, or used to pay down debt—on mortgage repayment. We determined that there was a positive effect for individuals who were eligible for the Economic Impact Payment (EIP) Stimulus and used it to increase their ability to make their next mortgage payment. However, this did not affect their overall likelihood of having paid off their mortgage. These findings held after various demographic controls were employed, as well as after controlling for alternative measures of spending meant to disentangle the EIP from other long-term patterns of saving and spending. Differences by Race and Socioeconomic status or age were also explored. Our results provide preliminary evidence that the EIP had a positive effect on mortgage payments during the COVID-19 pandemic, and show that future government stimulus payments should take into account patterns in saving affecting repayment. © 2022 American Real Estate Society.