In the aftermath of the 2008 financial crisis, millions of Americans were focused on something far more pressing than daily fluctuations of the stock market or the next round of campaign rallies. Their minds were fixed on their monthly mortgage payments. The Federal Reserve was stepping in to stabilize the economy and cutting interest rates, while policymakers rolled out programs to help struggling homeowners refinance into cheaper loans.
What few expected was that those lower mortgage payments might result in nudging more people to the polls.
A new study, “Mortgage Refinancing and Political Participation,” by McIntire Professor W. Ben McCartney and co-authors Haoyang Liu and Xiaohan Zhang of the Federal Reserve Bank of Dallas, Rodney Ramcharan of the University of Southern California, and Calvin Zhang of the University of Oregon, found exactly that. According to their research, homeowners who refinanced their mortgages during the Great Recession were more likely to vote in the 2012 presidential election than otherwise similar homeowners who did not.
While it may read like a modest point on paper, it’s one that reveals something more important about how financial life and civic life are intertwined.
Why Many Homeowners Could Not Refinance
To understand the finding, it helps to revisit the strange economics of the late 2000s.
After the housing crash, mortgage rates dropped sharply. In theory, homeowners could refinance into lower rates and reduce their monthly payments. But for many, that option was out of reach.
“Lots of households in 2009, 2010, and 2011 didn’t refinance their mortgages because they were already underwater,” McCartney explains. Their homes had lost value, leaving them owing more than the property was worth and banks unwilling to refinance loans under those unfavorable conditions. “They went to their banks and said they were paying something like 7%, but saw that rates were now 4% and wanted to refinance their mortgage. But the banks said, ‘You owe $600,000 on your current mortgage, and our assessor tells us your house is worth $500,000, so we’re not going to give you a $600,000 loan at any rate against a $500,000 house.’”
Government programs like the Home Affordable Refinance Program, or HARP, managed to change that situation. By relaxing some of the usual constraints, the program allowed certain borrowers to get new deals even if they lacked sufficient home equity. So while some households got relief, others did not, creating a natural divide.
A Small Change That Adds Up
McCartney and his fellow researchers examined that gap between those who were able to refinance and those who were refused. By linking mortgage data with voter records for millions of Americans, they tracked who showed up to vote in 2012.
The result is strikingly consistent across multiple approaches: Refinancing was associated with increased voter turnout. The effect is typically in the range of 2 to 4 percentage points. Maybe that sounds small, but among homeowners, who already vote at relatively high rates, it is quite meaningful.
McCartney emphasizes the importance of that margin: “It’s not as if people who didn’t refinance threw their hands up and said they weren’t voting. It’s on a margin. We’re talking about a 4 percentage point change in the election, but that can be very close.”
Scaled up nationally, that margin translates into large numbers. The effect “incentivized tens of thousands of people to go vote,” he says.
More Than Money, Especially for Swing Voters
Why would refinancing make someone more likely to vote? Part of the answer is straightforward economics.
Refinancing often reduced monthly mortgage payments by hundreds of dollars, sometimes more than $300, adding up to substantial savings over time. That kind of financial relief can ease stress and free up resources, making the mental decision to be part of civic participation a little easier.
But the story goes beyond the total of dollars spent. It also touches on how people perceive institutions in the U.S.
“If people feel like the financial system is working for them, it might make them more inclined to then engage with the civic process,” McCartney says.
That vision of societal pillars and their perceived fairness in society matters. When government policies and financial organizations seem to deliver real benefits, people may feel more connected to the system. When those systems feel unresponsive or biased, withdrawal from and distrust of institutions can follow.
“Lots of people feel like banks and the government are elite institutions,” McCartney notes. “If they think that they’re working for them, then they engage with them. But if it feels to them like the system is broken, corrupt, or mistreating them, they disengage.”
One of the most intriguing findings in the study is that the effect is not evenly distributed across voters. The biggest increases in turnout show up among unaffiliated voters, people who are not strongly tied to either major political party.
Committed partisans tend to vote no matter what. But for those on the margins, people who are registered as independent and therefore not voting in primaries for either major American political party, the financial boost from refinancing appears to make a significant difference. McCartney describes especially large responses among this group, “upwards of 10 to 12%.”
The broader implication is that economic policy can have ripple effects far beyond its immediate goals. Programs like HARP were designed to stabilize the housing market and improve household finances. The initiatives did that, but they also influenced who participates in democracy.
McCartney goes back to the old political axiom: “People are always saying, ‘It’s the economy, stupid.’” This research suggests a more personalized version: It’s your economic situation that may matter most.
When policies tangibly improve people’s lives—lowering bills, reducing stress, and making the system feel responsive—they may also make people more likely to engage with that system. As McCartney notes, he and his co-authors are attempting to explain something that has been tricky: “directly linking how people’s personal financial situations affect their civic engagement and trying to actually pin those choices down statistically.”
Having more data hasn’t suddenly made this easy work, of course. Yet this study offers a clearer signal. When people get a break on their monthly bills, some of them do make an effort to vote.
