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Mortgage pricing, borrower-based limits, and retention

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  • Reite, Endre J.
  • Oust, Are
  • Bach, Rune
  • Holst, Jakob

Abstract

This study examines how initial mortgage pricing and macroprudential lending limits shape the duration of the client–bank relationship. Using 14,020 Norwegian mortgage contracts issued between 2011 and 2022, we estimate a Cox proportional hazards model and a complementary difference-in-differences framework around the 2017 tightening of debt-to-income and loan-to-value caps. The results indicate that higher loan-to-value and debt-to-income ratios shorten relationship duration, while credit risk became less influential after 2017. Borrowers receiving the lowest initial rates are most likely to switch, consistent with stronger price sensitivity. The findings suggest that regulation shifts behavioral responses from risk-based to rule-based constraints. Although associational, the evidence contributes to the understanding of how pricing and regulation jointly affect customer retention and competition in mortgage markets.

Suggested Citation

  • Reite, Endre J. & Oust, Are & Bach, Rune & Holst, Jakob, 2026. "Mortgage pricing, borrower-based limits, and retention," Finance Research Letters, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:finlet:v:92:y:2026:i:c:s1544612326001078
    DOI: 10.1016/j.frl.2026.109576
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