Abstract: Households often fail to refinance mortgages, foregoing substantial
reductions in interest payments. We implement a large-scale experiment on the
mortgage borrowers in a Chilean bank to study whether information interventions
affect refinancing behavior. We randomly assign borrowers to receive treatments
that target distinct information frictions, and track their search and refinancing
behavior over time. We find that the most effective intervention—giving information
about gains from refinancing and details about how to refinance—increases search
for refinancing offers by 20%, with significantly larger effects for those with the
largest gains from refinancing. We develop and estimate an equilibrium model of
refinancing to evaluate alternative policies that affect refinancing frictions, as well
as its implications for market power and the passthrough of monetary policy.

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