Discussion Paper Details

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Title: The Geography of Mortgage Lending in Times of FinTech

Author(s): Christoph Basten and Steven Ongena

Publication Date: June 2020

Keyword(s): Banking Automation, Bartik instrument, Credit Risk Diversification, Fintech, Mortgage lending, Online Pricing, Pandemic and spatial competition

Programme Area(s): Financial Economics

Abstract: How does banks' geographical footprint change when a FinTech platform allows offering mortgages to regions without branch presence? Unique data on responses from different banks to each household yield three salient findings: First, banks offer 4% more often and 6 basis points cheaper when markets have high versus low concentration, implying more profitable follow-on business. Second, they offer 2% more often and 2 bps cheaper when unemployment or house price growth in the applicant's state are one standard deviation less correlated with those at home, improving portfolio diversification. Third, these offers are increasingly automated, using available hard information more efficiently.

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Bibliographic Reference

Basten, C and Ongena, S. 2020. 'The Geography of Mortgage Lending in Times of FinTech'. London, Centre for Economic Policy Research.