Refinancing cross-subsidies in the mortgage market

• 成果类型: Article
• 署名作者: Fisher, Jack; Gavazza, Alessandro; Liu, Lu; Ramadorai, Tarun; Tripathy, Jagdish
• 署名单位: Harvard University; University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK; University of Pennsylvania; Imperial College London; Bank of England
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103876
• 发表日期: 2024
• 关键词: Mortgages; Refinancing; Cross-subsidies; wealth inequality; Household inaction and inertia; household finance

摘要

In household finance markets, inactive households can implicitly cross -subsidize active households who promptly respond to financial incentives. We assess the magnitude and distribution of cross -subsidies in the mortgage market. To do so, we build a structural model of household mortgage refinancing and estimate it on rich administrative data covering the stock of outstanding mortgages in the UK. We estimate sizeable cross -subsidies that flow from relatively poorer households and those located in less -wealthy areas towards richer households and those located in wealthier areas. Our work highlights how the design of household finance markets can contribute to wealth inequality.