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STICERD Industrial Organisation Seminars

Information Frictions in Mortgage Refinancing

Vivek Bhattacharya (Northwestern)

Monday 29 April 2024 15:00 - 16:30

SAL 3.05, 3rd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

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Unless otherwise specified, in-person seminars are open to the public.

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About this event

Households often fail to refinance mortgages, foregoing substantial reductions in interest payments. We implement a large-scale experiment on the mortgage borrowers in a Chilean bank to study whether information interventions affect refinancing behavior. We randomly assign borrowers to receive treatments that target distinct information frictions, and track their search and refinancing behavior over time. We find that the most effective intervention---giving information about gains from refinancing and details about how to refinance---increases search for refinancing offers by 20%, with significantly larger effects for those with the largest gains from refinancing. We develop and estimate an equilibrium model of refinancing to evaluate alternative policies that affect refinancing frictions, as well as its implications for market power and the passthrough of monetary policy.

Industrial Organisation seminars are held on Mondays in term time at 12:30-14:00, in person in SAL 3.05, unless specified otherwise.

Seminar organiser: Alessandro Gavazza.

For further information please contact Sadia Ali: s.ali43@lse.ac.uk.

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This event will take place in SAL 3.05, 3rd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

The building is labelled SAL on the map. Enter the building via Lincoln's Inn Fields.

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