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Mortgage (mis)pricing: The case of co-borrowers

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  • Tzioumis, Konstantinos

Abstract

This paper provides evidence for a performance differential between loans with one borrower and loans with two borrowers. We argue that the choice of observables considered during the rate adjustment process may lead to mortgage mispricing for loans with co-borrowers. Our findings offer an example of borrower-level information that mortgage lenders collect, which is not used in pricing, but is predictive of performance.

Suggested Citation

  • Tzioumis, Konstantinos, 2017. "Mortgage (mis)pricing: The case of co-borrowers," Journal of Urban Economics, Elsevier, vol. 99(C), pages 79-93.
    • Handle: RePEc:eee:juecon:v:99:y:2017:i:c:p:79-93
    DOI: 10.1016/j.jue.2016.12.004
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    References listed on IDEAS

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    9. Erik Hurst & Benjamin J. Keys & Amit Seru & Joseph Vavra, 2016. "Regional Redistribution through the US Mortgage Market," American Economic Review, American Economic Association, vol. 106(10), pages 2982-3028, October.
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    Cited by:

    1. Andreas Fuster & Matthew Plosser & James Vickery, 2018. "Does CFPB Oversight Crimp Credit?," Staff Reports 857, Federal Reserve Bank of New York.
    2. Jakučionytė, Eglė & Singh, Swapnil, 2022. "Bowling alone, buying alone: The decline of co-borrowers in the US mortgage market," Journal of Housing Economics, Elsevier, vol. 58(PB).
    3. Egle Jakucionyte & Swapnil Singh, 2020. "Bowling Alone, Buying Alone: The Decline of Co-Borrowers in the US Mortgage Market," Bank of Lithuania Working Paper Series 78, Bank of Lithuania.
    4. Gill, Balbinder Singh, 2023. "Health uninsurance premium and mortgage interest rates," International Review of Financial Analysis, Elsevier, vol. 87(C).
    5. Goodman, Laurie & Zhu, Jun, 2023. "Single borrowers versus coborrowers in the pandemic: Mortgage forbearance take-up and performance," Journal of Housing Economics, Elsevier, vol. 59(PB).

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    More about this item

    Keywords

    Risk-based pricing; Mortgage contract design;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General

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