The role of technology in mortgage lending

Andreas Fuster, Matthew Plosser, Philipp Schnabl and James Vickery ()

No 836, Staff Reports from Federal Reserve Bank of New York

Abstract: Technology-based (?FinTech?) lenders increased their market share of U.S. mortgage lending from 2 percent to 8 percent from 2010 to 2016. Using market-wide, loan-level data on U.S. mortgage applications and originations, we show that FinTech lenders process mortgage applications about 20 percent faster than other lenders, even when controlling for detailed loan, borrower, and geographic observables. Faster processing does not come at the cost of higher defaults. FinTech lenders adjust supply more elastically than other lenders in response to exogenous mortgage demand shocks, thereby alleviating capacity constraints associated with traditional mortgage lending. In areas with more FinTech lending, borrowers refinance more, especially when it is in their interest to do so. We find no evidence that FinTech lenders target marginal borrowers. Our results suggest that technological innovation has improved the efficiency of financial intermediation in the U.S. mortgage market.

Keywords: mortgage; technology; prepayments; nonbanks (search for similar items in EconPapers)
JEL-codes: D14 D24 G21 G23 (search for similar items in EconPapers)
Date: 2018-02-01
New Economics Papers: this item is included in nep-ban, nep-pay and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

Downloads: (external link)
https://www.newyorkfed.org/research/staff_reports/sr836.html Summary (text/html)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr836.pdf Full text (application/pdf)

Related works:
Journal Article: The Role of Technology in Mortgage Lending (2019)
Working Paper: The Role of Technology in Mortgage Lending (2018)
Working Paper: The Role of Technology in Mortgage Lending (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:836

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().