Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
Session Chair: Charles Nathanson, Northwestern University Discussant: Sonia Gilbukh, CUNY Baruch College
Location:Room 619
Presentations
Mortgage Lock-In, Mobility, and Labor Reallocation
Julia Fonseca1, Lu Liu2
1UIUC; 2The Wharton School, University of Pennsylvania
We study the impact of rising mortgage rates on mobility and labor reallocation. Using individual-level credit record data and variation in the timing of mortgage origination, we show that a 1 p.p. decline in mortgage rate deltas (Δr), measured as the difference between the mortgage rate locked in at origination and the current market rate, reduces moving rates by 0.68 p.p, or 9%. We find that this relationship is nonlinear: once Δr is high enough, households’ alternative of refinancing without moving becomes attractive such that moving probabilities no longer depend on Δr. Lastly, we find that mortgage lock-in attenuates household responsiveness to shocks to nearby employment opportunities that require moving, measured as wage growth in counties within a 50 to 150-mile ring and instrumented with a shift-share instrument. We provide causal estimates of mortgage lock-in effects, highlighting unintended consequences of monetary tightening with long-term fixed-rate mortgages on mobility and labor markets.