Digital Disruption in U.S. Mortgage Markets: Fintech's Local Impact on Access and Competition

Abstract

This paper examines the competitive response of incumbent U.S. mortgage lenders to the rise of online lending platforms, focusing on heterogeneity across geographic markets with diverse demographic characteristics. Using Home Mortgage Disclosure Act (HMDA) data between 2008 and 2017, the analysis reveals that large financial institutions see significant declines in applications and originations following Fintech entry, especially in refinancing. In contrast, local and small lenders experience growth in originations, notably in higher-income areas and counties with greater minority populations. While large incumbents remain resilient in home-purchase mortgages, the overall county-level decline in originations suggests a net loss in loan volume that Fintech may not fully offset. These findings underscore the role of incumbent adaptability in shaping future mortgage accessibility.

Keywords: Fintech, Mortgage industry, Market Competition