We 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.
|Date of creation:||Aug 2013|
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