Household mortgage refinancing decisions are neighbor influenced, especially along racial lines

W. Ben McCartney and Avni M. Shah

Journal of Urban Economics, 2022, vol. 128, issue C

Abstract: Neighborhood peer effects have been shown to affect households publicly observable decisions, but how they affect private decisions, like mortgage refinancing, remains unclear. Using precisely geolocated data and a nearest-neighbor research design, we find that households are 7% more likely to refinance if a neighbor within 50 m has recently refinanced. Consistent with a word-of-mouth mechanism, social influence effects are stronger when neighbors live especially nearby, weaker when owners are non-occupants, and stronger when neighbors and owners are of the same race. Our results suggest an important role for neighborhood peer effects in explaining regional variation in refinancing activity.

Keywords: Household finance; Refinancing; Peer effects; Neighborhoods (search for similar items in EconPapers)
JEL-codes: D12 D14 D71 H31 R23 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:128:y:2022:i:c:s0094119021000917

DOI: 10.1016/j.jue.2021.103409

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