Climate change is increasingly recognized as a source of financial risk, yet the extent to which mortgage markets incorporate long-run environmental exposure remains uncertain. This paper examines whether physical climate risk is reflected in mortgage market outcomes at origination. Using loan-level data from the Home Mortgage Disclosure Act (HMDA) matched to county-level measures of climate exposure, the analysis evaluates two key margins of lender behavior: mortgage pricing and loan sales to government-sponsored enterprises (GSEs). The empirical analysis focuses on Florida, a high-exposure setting characterized by substantial vulnerability to hurricanes, flooding, and other climate-related hazards. Across most specifications, the results provide limited evidence that climate risk is systematically incorporated into mortgage market decisions. Using a fixed effects regression framework applied to more than 3 million mortgage originations between 2018 and 2024, mortgage rate spreads do not vary meaningfully with climate exposure once borrower, loan, and geographic characteristics are accounted for. While some temporary pricing differences emerge across years and coastal regions, these effects are economically modest and inconsistent over time. In addition, there is no evidence that lenders systematically respond to climate exposure by reallocating loans through securitization to GSEs. Overall, the findings suggest that long-run climate risk remains only partially reflected within mortgage market pricing and institutional structures. Standardized underwriting frameworks, compressed mortgage pricing, and institutional features of the U.S. housing finance system may limit the extent to which environmental risk is incorporated into mortgage lending decisions at origination.
