Failure to Refinance / Benjamin J. Keys, Devin G. Pope, Jaren C. Pope.

Format:

Book

Author/Creator:

Keys, Benjamin J.

Contributor:

National Bureau of Economic Research.

Pope, Devin G.

Pope, Jaren C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20401.

NBER working paper series no. w20401

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

Households that fail to refinance their mortgage when interest rates decline can lose out on substantial savings. Based on a large random sample of outstanding U.S. mortgages in December of 2010, we estimate that approximately 20% of households for whom refinancing would be optimal and who appeared unconstrained to do so, had not taken advantage of the lower rates. We estimate the present-discounted cost to the median household who fails to refinance to be approximately $11,500, making this a particularly large consumer financial mistake. To shed light on possible mechanisms and corroborate our main findings, we also provide results from a mail campaign targeted at a sample of homeowners that could benefit from refinancing.

Notes:

Print version record

August 2014.