The potential impact of financial portability measures on mortgage refinancing: Evidence from Chile

Carlos Madeira

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This study analyses the potential impact of a recent Financial Portability Law in Chile, which substantially reduces the monetary and time costs of mortgage modification. I show that mortgage refinancing is positively associated with financial education, liquidity needs and the timing for optimal refinancing. A counterfactual exercise shows that the new legislation can substantially increase refinancing rates and bring significant welfare gains, especially if it lowers the cognitive costs of the process. Welfare gains are larger for owners of second properties and top valued homes. Finally, bank switching decisions for consumer loans are found to be unaffected by mortgage refinancing.

Date: 2020-12
New Economics Papers: this item is included in nep-ban and nep-fle
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Journal Article: The potential impact of financial portability measures on mortgage refinancing: Evidence from Chile (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:894

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