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This paper provides novel evidence on lenders' mortgage pricing and how central bank policies affected it. Using the universe of mortgages originated in the UK, we show that lenders seek to price discriminate across heterogeneous borrowers by offering menus of two-part tariffs composed of interest rates and origination fees, and that during recent periods of unconventional monetary policy lenders decreased rates and increased fees. To understand lenders' pricing strategies and their effects on market equilibrium, we develop and estimate a discrete-continuous model of mortgage demand and lender competition in which borrowers may have different sensitivities to rates and fees.
