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Jan 21, 2026 Faculty Finance Research in Education

Julia Fonseca wins 2025 Brattle Group First Prize for mortgage lock-in research

By John Moist

Julia Fonseca, associate professor of finance at Gies College of Business, has received the Brattle Group First Prize for the best corporate finance paper published in The Journal of Finance in 2025.

Fonseca earned the honor for “Mortgage Lock-In, Mobility, and Labor Reallocation,” which she co-authored with Lu Liu of The Wharton School. The paper provides new causal evidence about how rising mortgage rates can reduce housing mobility—and impact labor markets—by increasing the financial cost of moving for homeowners with low interest rates.

“Receiving this award is deeply meaningful,” said Fonseca. “We’re passionate about this work because it speaks to a real constraint facing households today, which we show impacts whether people move toward better opportunities.”

The Brattle Group Prizes in Corporate Finance recognize outstanding research published in The Journal of Finance, which is widely recognized as one of the foremost journals in its field. Each year, the journal’s associate editors select the winning papers from articles published in JF during the previous year. The First Prize carries with it a $25,000 award and is presented at the American Finance Association’s annual meeting.

In the US, most borrowers with fixed-rate mortgages can keep their interest rate for decades. When rates rise sharply, as they did in 2022 and 2023, many households could face higher monthly payments if they move and need to finance a home at the current rate. 

Fonseca and Liu show that this creates a “lock-in” effect: even when moving might make sense, the added costs can keep a household in place. The researchers leveraged individual-level credit record data from millions of borrowers to demonstrate that a 1 percentage point decline in the gap between a household’s “locked” mortgage rate and the current market rate reduces moving by 9%. That impact causes a labor market ripple. When nearby areas offer stronger wage growth, borrowers that are less locked-in are more likely to move. But the researchers found impacts outside of relocation.

“We also found that this phenomenon has broader implications beyond individual mobility, including for housing and labor markets,” explained Fonseca. “This research is possible because of the generous investments that Gies has made in the Gies Consumer and Small Business Credit Panel, a state-of-the-art credit panel.”

Fonseca serves as Associate Editor to both the Journal of Finance and the Review of Finance. Widely recognized for her work on how mortgage markets and financial constraints shape labor market mobility and economic outcomes, she studies how finance connects to where people live and work in their everyday lives. That line of thinking extends into other work, such as her recent study on medical debt’s impact on credit reports. She brings that expertise in household, development, and labor finance to the classroom, as well. In her course FIN 535: Wealth Management, Gies Business Master of Science in Finance students apply research insights to real-world scenarios in insurance, investing, real estate, and long-term financial planning.

The Brattle Group First Prize places Fonseca’s work among the most influential contributions to the study of finance and highlights a scholar whose research unites cutting-edge methods and questions that define our everyday economic lives.

 

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