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Refinancing Inequality During the COVID-19 Pandemic

Author

Listed:
  • Agarwal, Sumit
  • Chomsisengphet, Souphala
  • Kiefer, Hua
  • Kiefer, Leonard C.
  • Medina, Paolina C.

Abstract

During the first half of 2020, the difference in savings from mortgage refinancing between high- and low-income borrowers was 10 times higher than before. This was the result of two factors: high-income borrowers increased their refinancing activity more than otherwise comparable low-income borrowers and, conditional on refinancing, they captured slightly larger improvements in interest rates. Refinancing inequality increases with the severity of the COVID-19 pandemic and is characterized by an underrepresentation of low-income borrowers in the pool of applications. We estimate a difference of $5 billion in savings between the top income quintile and the rest of the market.

Suggested Citation

  • Agarwal, Sumit & Chomsisengphet, Souphala & Kiefer, Hua & Kiefer, Leonard C. & Medina, Paolina C., 2024. "Refinancing Inequality During the COVID-19 Pandemic," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 59(5), pages 2133-2163, August.
    • Handle: RePEc:cup:jfinqa:v:59:y:2024:i:5:p:2133-2163_5
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