Climate Change Concerns and Mortgage Lending
66 Pages Posted: 16 Sep 2019 Last revised: 21 May 2020
Date Written: February 12, 2019
We examine whether beliefs about climate change affect loan officers’ mortgage lending decisions. We show that abnormally high local temperature leads to elevated attention to and belief in climate change in a region. Loan officers approve fewer mortgage applications and originate lower amount of loans in abnormally warm weather. This effect is not fully explained by changes in local economic conditions and demand for mortgage credit, and is considerably stronger among counties with strong prior beliefs about climate change, counties heavily exposed to the risk of sea-level rise, and during periods of heightened media attention. By contrast, Fintech lenders partially fill the gaps in demand left by traditional lenders when local temperature is abnormally high.
Keywords: Climate Change, Global Warming, Mortgage Lending, Temperature Anomaly
JEL Classification: G40, G41, Q54
Suggested Citation: Suggested Citation