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Affordable housing, unaffordable credit? Concentration and high-cost lending for manufactured homes

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  • Sebastian Doerr
  • Andreas Fuster

Abstract

Policy makers place high hopes in manufactured homes - the largest source of unsubsidized affordable housing in the US - to alleviate housing supply shortages. This paper shows that high market concentration in the multi-billion-dollar manufactured home loan market allows lenders to charge significantly higher interest rates than for site-built homes. Loan-level data indicate that borrowers in counties with higher lender concentration face significantly higher rates. Evidence from bunching at the regulatory HOEPA rate threshold, an instrumental variable analysis, and a difference-in-differences analysis around HOEPA's introduction suggests a causal link. We further show that integrated lenders, which play an outsized role in the manufactured home loan market, charge particularly high rates, and we provide evidence suggesting that these lenders exploit their market power over borrowers.

Suggested Citation

  • Sebastian Doerr & Andreas Fuster, 2025. "Affordable housing, unaffordable credit? Concentration and high-cost lending for manufactured homes," BIS Working Papers 1255, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1255
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    Keywords

    manufactured homes; mortgage market; competition; household finance; HOEPA;
    All these keywords.

    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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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