The Geography of Mortgage Lending in Times of FinTech
57 Pages Posted: 29 Jun 2020
There are 2 versions of this paper
Mortgage Lending through a FinTech Web Platform. The Roles of Competition, Diversification, and Automation.
Date Written: June 2020
Abstract
How does banks' geographical footprint change when a FinTech platform allows offering mortgages to regions without branch presence? Unique data on responses from different banks to each household yield three salient findings: First, banks offer 4% more often and 6 basis points cheaper when markets have high versus low concentration, implying more profitable follow-on business. Second, they offer 2% more often and 2 bps cheaper when unemployment or house price growth in the applicant's state are one standard deviation less correlated with those at home, improving portfolio diversification. Third, these offers are increasingly automated, using available hard information more efficiently.
Keywords: Banking Automation, Bartik instrument, Credit Risk Diversification, Fintech, Mortgage lending, Online Pricing, Pandemic, spatial competition
JEL Classification: G2, L1, R3
Suggested Citation: Suggested Citation