Mortgage Refinancing, Consumer Spending, and Competition: Evidence from the Home Affordable Refinance Program

• 成果类型: Article
• 署名作者: Agarwal, Sumit; Amromin, Gene; Chomsisengphet, Souphala; Landvoigt, Tim; Piskorski, Tomasz; Seru, Amit; Yao, Vincent
• 署名单位: National University of Singapore; Federal Reserve System - USA; Federal Reserve Bank - Chicago; Columbia University; National Bureau of Economic Research; University System of Georgia; Georgia State University
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac039
• 发表日期: 2023
• 页码: 499-537
• 关键词: household consumption; liquidity constraints; predictable changes; interest-rates; debt response; income; MARKET; prices; equity; POLICY

摘要

We examine the ability of the government to impact mortgage refinancing activity and spur consumption by focusing on the Home Affordable Refinance Program (HARP) that relaxed housing equity constraints by extending government credit guarantee on insufficiently collateralized refinanced mortgages. Difference-in-difference tests based on program eligibility criteria reveal a significant increase in refinancing activity by HARP. More than three million eligible borrowers with primarily fixed-rate mortgages refinanced under HARP, receiving an average reduction of 1.45% in interest rate ($3,000 in annual savings). Durable spending by borrowers increased significantly after refinancing. Regions more exposed to the program saw a relative increase in non-durable and durable consumer spending, a decline in foreclosure rates, and faster recovery in house prices. Competitive frictions in the refinancing market hampered the program's impact: the take-up rate and annual savings among those who refinanced were reduced by 10-20%, with amplified effects for the most indebted borrowers.