Rocco Ciciretti (Roma Tor Vergata) on "Till Mortgage Do Us Part: Refinancing Costs and Household’s Switching Bank"

Speaker:  Rocco Ciciretti - Roma Tor Vergata
  Wednesday, September 21, 2016 at 12:30 PM Polo Santa Marta, Via Cantarane 24, Stanza 1.59
We show that the mortgage refinancing costs, which serve as a “lock-in” for mortgage holders, play an important role for household bank switching. Using a unique household panel dataset that enables us to infer individual bank changes, in conjunction with a legal reform that exogenously slashed down the refinancing costs, we find that the households responded to this change by increasingly switching to take out a mortgage (switch for a mortgage), and switching to refinance an existing loan (switch with a mortgage). Dissecting these results, we show that the effect of the reform was not uniform across households, with more educated individuals and those residing in ex-ante less competitive markets being at the forefront of the wave of bank switches.

Programme Director
Roberto Renò

Publication date
March 3, 2016