Affordable Housing, Unaffordable Credit? Concentration and High-Cost Lending for Manufactured Homes

Abstract

This paper shows that high market concentration in the U.S. manufactured home loan market allows lenders to charge markedly higher interest rates than in the mortgage market for site-built homes. Borrowers in counties with higher lender concentration face significantly higher rates, and evidence from bunching at a regulatory rate threshold, an instrumental variable analysis, and a difference-in-differences analysis suggests a causal link. Integrated lenders, which play an outsized role in this market, charge particularly high rates, and we provide evidence suggesting that these lenders exploit their market power over borrowers. We discuss factors that may explain limited lender entry.