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The geography of mortgage lending in times of FinTech


Basten, Christoph; Ongena, Steven (2019). The geography of mortgage lending in times of FinTech. Swiss Finance Institute Research Paper 19-39, University of Zurich.

Abstract

We analyze how banks’ allocations of mortgage credit across regions change when an online platform enables them to offer to regions where they have no branches, staff or legacy. Unique data from an online platform with offers from different banks to each mortgage application yield three novel findings. First, banks offer more and cheaper credit to borrowers in less competitive offline markets. Second, banks offer more credit to more distant locations, where house prices appear less over-heated, and past price growth is less correlated with that in their existing portfolio. Third, over time offers become more automated, lowering operational costs.

Abstract

We analyze how banks’ allocations of mortgage credit across regions change when an online platform enables them to offer to regions where they have no branches, staff or legacy. Unique data from an online platform with offers from different banks to each mortgage application yield three novel findings. First, banks offer more and cheaper credit to borrowers in less competitive offline markets. Second, banks offer more credit to more distant locations, where house prices appear less over-heated, and past price growth is less correlated with that in their existing portfolio. Third, over time offers become more automated, lowering operational costs.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:9 August 2019
Deposited On:29 Oct 2019 14:15
Last Modified:22 Jul 2021 08:42
Series Name:Swiss Finance Institute Research Paper
OA Status:Green
Publisher DOI:https://doi.org/10.2139/ssrn.3434966
Related URLs:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3434966 (Organisation)
Other Identification Number:merlin-id:18048

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