Climate Change Concerns and Mortgage Lending

Abstract

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 is stronger among counties exposed to sea-level rise risk and during periods of heightened attention to climate change. By contrast, Fintech lenders partially fill the gap 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