Innovations in Information Technology and the Mortgage Market

Bulent Guler

Review of Economic Dynamics, 2015, vol. 18, issue 3, 456-483

Abstract: In this paper I analyze the effects of innovations in information technology on the mortgage and housing markets using a life-cycle model with incomplete markets and idiosyncratic income, as well as moving and house price shocks. I explicitly model the housing tenure choices of households. Lenders offer individual-specific mortgage contracts to home buyers, and the terms of these contracts are endogenously determined. I find that, as lenders have better information about the households, the average mortgage premium, foreclosure rate, and homeownership rate all increase while average down payment decreases. Hence, improvements in information technology can rationalize the relaxation of mortgage credit terms, which has been suggested as one of the main reasons for the latest financial crisis. (Copyright: Elsevier)

Keywords: Housing; Mortgage contract; Asymmetric information; Default (search for similar items in EconPapers)
JEL-codes: D82 D91 E21 R21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2014.09.007
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Software Item: Code for "Innovations in Information Technology and the Mortgage Market" (2014)
Working Paper: Innovations in Information Technology and the Mortgage Market (2010)
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:red:issued:13-129

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2014.09.007

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().