Articlegreen2019

The Role of Technology in Mortgage Lending

Andreas Fuster · Matthew C. Plosser · Philipp Schnabl · James Ian Vickery

1,180 citations0/0 files storedReview of Financial Studies

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FinTech, Crowdfunding, Digital Finance Housing Market and Economics Digital Transformation in Financial Services

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.

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References

2002Information Production and Capital Allocation: Decentralized versus Hierarchical Firms 2006Household Finance 2018Fintech, regulatory arbitrage, and the rise of shadow banks 2009The Age of Reason: Financial Decisions over the Life Cycle and Implications for Regulation

Cited by

2019Fintech and banking: What do we know?2019On the Rise of FinTechs: Credit Scoring Using Digital Footprints 2021Predictably Unequal? The Effects of Machine Learning on Credit Markets 2019To FinTech and Beyond 2021Consumer-lending discrimination in the FinTech Era 2021Does fintech innovation improve bank efficiency? Evidence from China’s banking industry 2021Fintech and access to finance 2020Does bank FinTech reduce credit risk? Evidence from China

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