Price discrimination and mortgage choice

Jamie Coen (), Anil Kashyap () and May Rostom
Additional contact information
Jamie Coen: London School of Economics
Anil Kashyap: University of Chicago

No 926, Bank of England working papers from Bank of England

Abstract: We characterise the large number of mortgage offers for which people qualify. Almost no one picks the cheapest option, nonetheless the one selected is not usually much more expensive. A few borrowers make very expensive choices. These big mistakes are most common when the menu they face has many expensive options, and are most likely for high loan to value and loan to income borrowers. Young people and first-time buyers are more mistake-prone. The dispersion in the mortgage menu is consistent with banks attempting to price discriminate for some borrowers who might pick poorly while competing for others who might shop more effectively.

Keywords: Price discrimination; consumer choice; mortgages (search for similar items in EconPapers)
JEL-codes: D12 G21 G51 G53 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2021-06-25
New Economics Papers: this item is included in nep-ban, nep-cwa and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Price Discrimination and Mortgage Choice (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0926

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