Fintech Lending and Mortgage Credit Access

Julapa Jagtiani, Lauren Lambie-Hanson and Timothy Lambie-Hanson

No 19-47, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Following the 2008 financial crisis, mortgage credit tightened and banks lost significant mortgage market share to nonbank lenders, including to fintech firms recently. Have fintech firms expanded credit access, or are their customers similar to those of traditional lenders? Unlike in small business and unsecured consumers lending, fintech mortgage lenders do not have the same incentives or flexibility to use alternative data for credit decisions because of stringent mortgage origination requirements. Fintech loans are broadly similar to those made by traditional lenders, despite innovations in the marketing and the application process. However, nonbanks market to consumers with weaker credit scores than do banks, and fintech lenders have greater market shares in areas with lower credit scores and higher mortgage denial rates.

Keywords: fintech; mortgage lending; homeownership; online mortgages; credit access (search for similar items in EconPapers)
JEL-codes: G20 G21 G28 R20 R30 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2019-11-18
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-pay and nep-ure
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Citations: View citations in EconPapers (2)

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DOI: 10.21799/frbp.wp.2019.47

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