Review of Financial Studies Vol. 32 No. 5 2019

The Role of Technology in Mortgage Lending

Andreas Fuster¹; Matthew Plosser²; Philipp Schnabl³; James Vickery²

¹ Swiss National Bank · ² Federal Reserve Bank of New York · ³ NYU Stern, NBER, and CEPR

Abstract

Technology-based (“FinTech”) lenders increased their market share of U.S. mortgage lending from 2% to 8% from 2010 to 2016. Using loan-level data on mortgage applications and originations, we show that FinTech lenders process mortgage applications 20% faster than other lenders, controlling for observable characteristics. Faster processing does not come at the cost of higher defaults. FinTech lenders adjust supply more elastically than do other lenders in response to exogenous mortgage demand shocks. In areas with more FinTech lending, borrowers refinance more, especially when it is in their interest. We find no evidence that FinTech lenders target borrowers with low access to finance.Received June 1, 2017; editorial decision November 5, 2018 by Editor Wei Jiang.

DOI

10.1093/rfs/hhz018

Volume

32

Issue

5

Pages

1854-1899

Language

en

Sources

openalex crossref bibtex:phds-export.bib

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