The Geography of Mortgage Lending in Times of FinTech

Steven Ongena and Christoph Basten

No 14918, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: How does banks’ geographical footprint change when a FinTech platform allows offering mortgages to regions without branch presence? Unique data on responses from different banks to each household yield three salient findings: First, banks offer 4% more often and 6 basis points cheaper when markets have high versus low concentration, implying more profitable follow-on business. Second, they offer 2% more often and 2 bps cheaper when unemployment or house price growth in the applicant’s state are one standard deviation less correlated with those at home, improving portfolio diversification. Third, these offers are increasingly automated, using available hard information more efficiently.

Keywords: Mortgage lending; Spatial competition; Credit risk diversification; Banking automation; Fintech; Online pricing; Bartik instrument; Pandemic (search for similar items in EconPapers)
JEL-codes: G2 L1 R3 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-pay and nep-ure
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Citations: View citations in EconPapers (1)

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Working Paper: The Geography of Mortgage Lending in Times of FinTech (2019)
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