Temporal Focal Points and Economic Outcomes: Evidence from U.S. Mortgage Lending

Supersedes Working Paper 21-04/R – Using High-Frequency Evaluations to Estimate Discrimination: Evidence from Mortgage Loan Officers

Temporal focal points shape high-stakes economic outcomes. We investigate this proposition in the U.S. mortgage market by documenting novel within-month patterns in lending. Using confidential Home Mortgage Disclosure Act data, we show that applications arrive smoothly throughout the month, yet approximately half of all originations occur in the final week. The Black approval gap, 2.4 percentage points unexplained at the start of the month, narrows to zero by month’s end. Underperforming loan officers and high-turnover lending institutions amplify this convergence. Demand-side factors, such as borrower financial constraints, also increase end-of-month volume, but the sensitivity does not vary meaningfully by applicant group.