House Prices, Household Credit, and Financial Technology

Peer-to-peer (P2P) lending is a key fintech innovation. However, research into factors which influence individuals’ use of these markets is limited. Some household studies have taken account of the effects of P2P investing.

Bazley shows that house prices, an important determinant of many household financial decisions, also impact individuals’ use of P2P loans. A one standard deviation increase in house price growth causes loan origination growth to fall by 44% of its mean. This is driven by reduced demand for loans to refinance other debts. Strong housing markets also lead to rising defaults among renters. These findings suggest that developments in traditional asset markets have implications for new markets created through fintech.

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