AbstractWe examine the closeness of relationships between households and their mortgage lenders using survey data which provide information on the duration, geographical proximity and scope of all bank relationships of a representative sample of households. Our analysis is based on a sample of 470 households which have a mortgage and multiple bank relations, allowing us to compare mortgage relations and non-mortgage relations for the same households. We find that mortgage relations are used for a broader scope of payment and saving transactions, have been more recently established, and are held with banks that are located closer to the household than non-mortgage relations. Examining the heterogeneity of mortgage relations across households, we find that financially sophisticated borrowers are less likely to hold their mortgage with a local bank. We find no evidence that more opaque borrowers, e.g. younger and urban households, maintain tighter mortgage relations.
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Bibliographic InfoPaper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1310.
Length: 22 pages
Date of creation: Aug 2013
Date of revision:
Mortgage loans; Household finance; Relationship banking.;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-08-31 (All new papers)
- NEP-BAN-2013-08-31 (Banking)
- NEP-URE-2013-08-31 (Urban & Real Estate Economics)
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