The Role of Technology in Mortgage Lending

Philipp Schnabl, James Vickery () and Matthew Plosser
Authors registered in the RePEc Author Service: Andreas Fuster

No 12961, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Technology-based (``FinTech'') lenders increased their market share of U.S. mortgage lending from 2% to 8% 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% 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: Financial intermediation; Fintech; Mortgages (search for similar items in EconPapers)
JEL-codes: G21 G23 L51 (search for similar items in EconPapers)
Date: 2018-05
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 (39)

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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)
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