The Geography of Mortgage Lending in Times of FinTech
45 Pages Posted: 9 Aug 2019 Last revised: 21 Aug 2019
Date Written: August 9, 2019
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.
Keywords: Mortgage Lending, Spatial Competition, Credit Risk, Diversification, Automation of Banking, FinTech, Online Pricing
JEL Classification: G2, L1, R2
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