Want to save on home loans? Just talk to your peers!

Want to save on home loans? Just talk to your peers! Want to save on home loans? Just talk to your peers!

October 29, 20202 min read
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For most of us, finance is complex. Yet making financial decisions is part of day-to-day life.


Take mortgages. Around 60 percent of U.S. households have a home mortgage, but how many actually understand its real value? Calculating things like interest rate trade-offs or closing costs is not easy, and research finds that a majority of families make financial mistakes because they fail to understand benefits or savings that might be open to them in refinancing.


There are ways to overcome this kind of “information friction”—the obstacles to understanding that make it hard for people to process complex financial ideas and concepts. One of these is education. Ensuring that people have direct access to clear information can help inform household decisions. That seems pretty basic.

Another, perhaps less understood, mechanism is the “peer effect”—the way we learn from and are influenced by what our peers or colleagues say or do.



A new paper published in the Review of Financial Studies by Gonzalo Maturana, associate professor of finance, takes a fresh look at how the peer effect can help households make better decisions about their mortgages. And he finds that work colleagues and associates can actually have a far greater positive impact on our financial outcomes than we might expect.


Together with Jordan Nickerson from MIT’s Sloan School of Management, Maturana ran a large-scale study of a particular U.S. peer group: public school teachers employed by the state of Texas.


Here’s what the study found:


Where there was a lot of mortgage refinancing going on among teachers in a particular school, individuals were a stunning 20.7 percent more likely to refinance their own mortgage. In other words, they were far more disposed to investigate alternatives and take advantage of the better deals on offer. The peer effect was also a critical factor in their subsequent choice of mortgage lender.


Maturana and Nickerson also found that the more savings a particular peer group was making in mortgage repayments, the more refinancing activity there was in that school or teacher network.


It is clear. With financial decisions, the network effect can create a positive feedback loop, said Maturana.



Household finance and mortgages are top of mind and play a part in most American families – and if you are a journalist looking to cover this topic – then let our experts help.


Gonzalo Maturana is an Associate Professor of Finance at the Goizueta Business School. He is an expert in the areas of corporate, household and real estate finance. Gonzalo is available to speak to media regarding this topic – simply click on his icon now to arrange an interview today.



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  • Gonzalo Maturana
    Gonzalo Maturana Associate Professor of Finance

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