Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 12, 2020 erstellt
Description:
This paper studies the effects of mortgage subsidies and imperfect competition in the U.S. mortgage market. I exploit novel quasi-experimental variation in interest rates generated by the discontinuities in pricing rules and find evidence of advantageous selection. I develop and estimate a rich industry model using detailed loan-level data. The model highlights the relationship between mortgage subsidies, intermediary lenders' market power, and borrower's advantageous selection. The model shows that mortgage subsidies enable advantageous selection, creating a deadweight loss of $7.90 billion. Counterfactual analysis reveals that promoting competition among intermediary lenders yields different efficiency effects depending on the subsidy condition. A 50% decrease in lender concentration further reduces efficiency by $1.39 billion if mortgages are subsidized, and conversely, increases efficiency by $750.07 million if mortgages are not subsidized