Climate change concerns and mortgage lending

We examine whether beliefs about climate change affect loan officers' mortgage lending decisions. We show that abnormally high local temperature leads to elevated attention to and belief in climate change in a region. Loan officers approve fewer mortgage applications and originate lower amounts of loans in abnormally warm weather. This effect is stronger among counties heavily exposed to the risk of sea-level rise, during periods of heightened public attention to climate change, and for loans originated by small lenders. Additional tests suggest that the negative relation between temperature and approval rate is not fully explained by changes in local economic conditions and demand for mortgage credit, or deteriorating quality of loan applicants. By contrast, Fintech lenders partially fill the gap in demand left by traditional lenders when local temperature is abnormally high.

Automated summary

This study examines the impact of beliefs about climate change on loan officers' mortgage lending decisions. The research shows that abnormally high local temperature increases attention to and belief in climate change, leading loan officers to approve fewer mortgage applications and provide lower loan amounts during warm weather. This effect is more pronounced in counties exposed to sea-level rise risk, periods of heightened public attention to climate change, and loans originated by small lenders. The study also finds that Fintech lenders partially address the demand for mortgage credit left by traditional lenders during abnormally high local temperature.