Abstract

http://ssrn.com/abstract=2233380
 


 



Advertising Expensive Mortgages


Umit G. Gurun


University of Texas at Dallas - Naveen Jindal School of Management

Gregor Matvos


University of Chicago - Booth School of Business

Amit Seru


University of Chicago - Booth School of Business

September 1, 2016

Journal of Finance, Forthcoming
Fama-Miller Working Paper
Kreisman Working Papers Series in Housing Law and Policy No. 10

Abstract:     
Using information on advertising and mortgages originated by subprime lenders, we study whether advertising helped consumers find cheaper mortgages. Lenders that advertise more within a region sell more expensive mortgages, measured as the excess rate of a mortgage after accounting for borrower, contract, and regional characteristics. These effects are stronger for mortgages sold to less sophisticated consumers. We exploit regional variation in mortgage advertising induced by the entry of Craigslist and other tests to demonstrate that these findings are not spurious. Analyzing advertising content reveals that initial/introductory rates are frequently advertised in a salient fashion, where reset rates are not.

Number of Pages in PDF File: 46

Keywords: Advertising, Policy intervention, Mortgages, Foreclosures, Housing crisis

JEL Classification: E65, G18, G21, H3, L85


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Date posted: March 16, 2013 ; Last revised: September 30, 2016

Suggested Citation

Gurun, Umit G. and Matvos, Gregor and Seru, Amit, Advertising Expensive Mortgages (September 1, 2016). Journal of Finance, Forthcoming; Fama-Miller Working Paper; Kreisman Working Papers Series in Housing Law and Policy No. 10. Available at SSRN: http://ssrn.com/abstract=2233380 or http://dx.doi.org/10.2139/ssrn.2233380

Contact Information

Umit G. Gurun
University of Texas at Dallas - Naveen Jindal School of Management ( email )
P.O. Box 830688
Richardson, TX 75083-0688
United States
Gregor Matvos
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Amit Seru (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

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