Fintech Lending and Mortgage Credit Access
Electronic version of an article published as [The Journal of FinTech, Volume 1, Number 1, 2021, 50 pages] [https://doi.org/10.1142/S2705109920500042] © [copyright World Scientific Publishing Company]
Posted: 8 Jul 2021
Date Written: December 30, 2020
Following the 2008 financial crisis, mortgage credit tightened and banks lost significant mortgage market share to nonbank lenders, including to fintech firms recently. Have fintech firms expanded credit access, or are their customers similar to those of traditional lenders? Unlike in small business and unsecured consumers lending, fintech mortgage lenders do not have the same incentives or flexibility to use alternative data for credit decisions because of stringent mortgage origination requirements. Fintech loans are broadly similar to those made by traditional lenders, despite innovations in the marketing and the application process. However, nonbanks market to consumers with weaker credit scores than do banks, and fintech lenders have greater market shares in areas with lower credit scores and higher mortgage denial rates.
Keywords: Fintech, mortgage lending, homeownership, online mortgages, credit access
JEL Classification: G20, G21, G28, R20, R30
Suggested Citation: Suggested Citation