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Mortgage (mis)pricing: The case of co-borrowers

Konstantinos Tzioumis ()

Journal of Urban Economics, 2017, vol. 99, issue C, 79-93

Abstract: This paper provides evidence for a performance differential between loans with one borrower and loans with two borrowers. We argue that the choice of observables considered during the rate adjustment process may lead to mortgage mispricing for loans with co-borrowers. Our findings offer an example of borrower-level information that mortgage lenders collect, which is not used in pricing, but is predictive of performance.

Keywords: Risk-based pricing; Mortgage contract design (search for similar items in EconPapers)
JEL-codes: G21 G23 R00 (search for similar items in EconPapers)
Date: 2017
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