Mortgage Refinance Trends During the COVID-19 Pandemic: Who Benefited Most from Low Interest Rates and Who Got Left Behind?

Nagy Adrián Róbert (2025) Mortgage Refinance Trends During the COVID-19 Pandemic: Who Benefited Most from Low Interest Rates and Who Got Left Behind? Pénzügyi és Számviteli Kar.

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Absztrakt (kivonat)

The COVID-19 pandemic triggered one of the most significant economic disruptions in recent U.S. history, sharply affecting labour markets, financial conditions, and househols. In response to the crisis, the Federal Reserve implemented unprecedented monetary easing, lowering the federal funds rate to near zero and undertaking large-scale purchases of Treasury and agency mortgage-backed securities. These actions pushed mortgage rates to historic lows, creating exceptionally strong incentives for households to refinance existing mortgages. Between 2020 and 2021, more than 14 million U.S. homeowners refinanced their loans, saving an average of over 200 dollars per month and substantially increasing household liquidity. However, despite this broad opportunity, access to refinancing was far from evenly distributed across the population. This thesis examines who benefited most from the COVID-19 refinancing boom and which groups were left behind, using a quantitative analysis of nearly 140,000 borrower-level observations from the 2020–2021 Home Mortgage Disclosure Act (HMDA) dataset. By combining descriptive statistics with logistic regression modelling, the study evaluates how the probability of refinancing differed across income groups, racial and ethnic categories, and geographic regions. The analysis also considers the influence of key financial variables, such as loan size, loan-to-value ratios, and local housing-market dynamics on borrowers’ ability to take advantage of historically low interest rates. The results reveal pronounced income-based inequalities in refinancing behavior. Middle-income households were substantially more likely to refinance than those in the lowest income quartile, even though lower-income borrowers would have benefitted most from reduced monthly payments. Liquidity constraints, employment instability, and the burden of closing costs appear to have limited refinancing opportunities for many financially vulnerable households. These findings are consistent with the broader literature on monetary transmission, which argues that the benefits of lower interest rates tend to be regressive when credit frictions are binding. Racial and ethnic disparities were also evident. Although financial characteristics explained part of the variation, descriptive evidence shows that White and Black borrowers refinanced at higher rates than Asian borrowers, while Hispanic borrowers exhibited largely comparable rates to non-Hispanic borrowers once controlling for observable factors. These patterns reflect long-standing structural differences in home equity accumulation, credit access, and neighborhood-level lending conditions. Geographic differences further amplified refinancing inequality. California exhibited the highest refinancing intensity, driven by rapid house-price appreciation and competitive mortgage markets, whereas states such as Florida, Texas, and New York displayed significantly lower adjusted refinancing probabilities. This underscores how local market structure, property valuations, and regional economic conditions shape the pass-through of monetary policy to households. Overall, the findings demonstrate that the benefits of historically low interest rates were distributed unevenly across income, race, and geography. While monetary policy succeeded in reducing borrowing costs at the aggregate level, structural frictions within the mortgage market limited its inclusiveness, disproportionately benefiting financially stronger and urban households. Understanding these disparities is essential for evaluating the effectiveness of the pandemic-era policy response and for designing future mechanisms, such as streamlined refinancing options, reduced transaction costs, and targeted assistance for vulnerable groups, that enhance the equity and reach of monetary transmission.

Intézmény

Budapesti Gazdasági Egyetem

Kar

Pénzügyi és Számviteli Kar

Tudományterület/tudományág

NEM RÉSZLETEZETT

Szak

Pénzügy és Számvitel

Mű típusa:	diplomadolgozat (NEM RÉSZLETEZETT)
Kulcsszavak:	inequality, jelzáloghitel, koronavírus-járvány (COVID-19), Mortgage, Refinance, refinanszírozás, társadalmi egyenlőtlenség
SWORD Depositor:	User Archive
Felhasználói azonosító szám (ID):	User Archive
Rekord készítés dátuma:	2026. Júl. 09. 11:11
Utolsó módosítás:	2026. Júl. 09. 11:11

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