Download or read book Consumer Mortgage Choice Between Fixed rate Mortgages and Adjustable rate Mortgages written by Hsiu-Wen Wu and published by . This book was released on 1992 with total page 386 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Factors Affecting Borrower Choice Between the Fixed and Adjustable Rate Mortgages written by Mark Christopher Lino and published by . This book was released on 1987 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Consumer Handbook on Adjustable Rate Mortgages written by Barry Leonard and published by DIANE Publishing. This book was released on 2007-10 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Adjustable-rate mortgages (ARMs) are loans with interest rates that change. ARMs may start with lower monthly payments than fixed-rate mortgages, but your monthly payments could change & go up -- sometimes by a lot; they may not go down much, or at all -- even if interest rates go down; you could end up owing more money than you borrowed; & if you want to pay off your ARM early to avoid higher payments, you might have to pay a penalty. The handbook explains how ARMs work & discusses some of the issues that borrowers may face. It includes ways to reduce the risks & gives some pointers about advertising & other ways you can get info. from lenders. This handbook can help you ask the right questions & figure out whether an ARM is right for you. Illus.
Download or read book Housing Financing Behavior written by Hsiu-Wen Wu and published by . This book was released on 1997 with total page 764 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Myopic Choice Between Fixed and Adjustable Rate Mortgages in Flanders written by Sven Damen and published by . This book was released on 2013 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Mortgage Timing written by Ralph S. J. Koijen and published by . This book was released on 2015 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study how the term structure of interest rates relates to mortgage choice, both at the household and the aggregate level. A simple utility framework of mortgage choice points to the long-term bond risk premium as theoretical determinant: when the bond risk premium is high, fixed-rate mortgage payments are high, making adjustable-rate mortgages more attractive. This long-term bond risk premium is markedly different from other term structure variables that have been proposed, including the yield spread and the long yield. We confirm empirically that the bulk of the time variation in both aggregate and loan-level mortgage choice can be explained by time variation in the bond risk premium. This is true whether bond risk premia are measured using forecasters' data, a VAR term structure model, or from a simple household decision rule based on adaptive expectations. This simple rule moves in lock-step with mortgage choice, lending credibility to a theory of strategic mortgage timing by households.
Download or read book What Calls to ARMs International Evidence on Interest Rates and the Choice of Adjustable Rate Mortgages written by Cristian Badarinza and published by . This book was released on 2016 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The relative popularity of adjustable-rate mortgages (ARMs) and fixed-rate mortgages (FRMs) varies considerably both across countries and over time. We ask how movements in current and expected future interest rates affect the share of ARMs in total mortgage issuance. Using a nine-country panel and instrumental variables methods, we present evidence that near-term (one-year) rational expectations of future movements in ARM rates do affect mortgage choice, particularly in more recent data since 2001. However longer-term (three-year) rational forecasts of ARM rates have a relatively weak effect, and the current spread between FRM and ARM rates also matters, suggesting that households are concerned with current interest costs as well as with lifetime cost minimization. These conclusions are robust to alternative (adaptive and survey-based) models of household expectations.
Download or read book A Simulation Approach to the Choice between Fixed and Adjustable Rate Mortgages written by William K. Templeton and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Mortgage borrowers appear to have a difficult time evaluating the costs and risks associated with the choice between a fixed rate mortgage and an adjustable rate mortgage (ARM). This study uses a simulation approach to model the choice. We represent the risk of the ARM with distributions of present value cost differentials for a variety of mortgage life periods. We provide insight on the financial planning aspect by modeling the impact of mortgage rate changes on the size of payments for ARMs. Simulation can yield non-intuitive results that may lead to better decision making by borrowers.
Download or read book Adjustable Rate Mortgages ARM s written by United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Housing and Community Development and published by . This book was released on 1984 with total page 1030 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Adjustable Rate Mortgages written by United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs. Subcommittee on Financial Institutions and Consumer Affairs and published by . This book was released on 1985 with total page 516 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Choice of Mortgage Contracts written by Brahima Coulibaly and published by . This book was released on 2007 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Adjustable and Fixed Rate Mortgages as a Screening Mechanism for Default Risk written by Lisa Lipowski Posey and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies how borrowers with different levels of default risk would self-select between Fixed Rate Mortgages (FRMs) and Adjustable Rate Mortgages (ARMs). We show that under asymmetric information, where the risk type of a borrower is private information to the borrower and not known by the lender, the unique equilibrium may be a separating equilibrium in which the high-risk (low-risk) borrowers choose ARMs (FRM's). Thus, the borrower's mortgage choice will serve as a signal of default risk, enabling lenders to screen high-risk and low-risk borrowers. It is possible for the separating equilibrium to yield positive economic profits for lenders in a competitive market. It is also possible to have a unique pooling equilibrium where all borrowers choose either FRMs or ARMs. The model implies that an increase in the proportion of high risks will increase the likelihood of a separating equilibrium where both mortgage types are offered. Also a uniform downward shift in the expected change in the interest rate or an increase in borrowers' current or future incomes make ARMs more attractive for both types of borrowers.
Download or read book Adjustable rate Mortgages and the Demand for Mortgage Credit written by John L. Goodman and published by . This book was released on 1990 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Choosing Between Fixed and Adjustable Rate Mortgages written by Monica Paiella and published by . This book was released on 2007 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates the determinants of households' choice between fixed rate (FRM) and adjustable rate mortgage (ARM) contracts, using the Bank of Italy's Survey of Household Income and Wealth. Contrary to the predictions of the theoretical literature, the analysis shows that most household characteristics proxying for exposure to other, non-mortgage-related risks and for individual risk aversion are irrelevant for the choice. This, in turn, crucially depends on the relative price of the mortgages and on whether the household is liquidity constrained. Liquidity constrained households find ARMs particularly attractive because their initial payments are generally lowest. This is so despite some evidence that the premium that lenders charge over their cost of funds is substantially higher on ARMs than on FRMs. Taken together, the evidence suggests that ARM holders do not fully take into account the risk of a rise of the reference interest rates. On the other hand, lenders price quite expensively this risk and borrowers end up paying a high price for the benefit of low initial payments.
Download or read book The Borrower s Choice of Fixed and Adjustable Rate Mortgages in the Presence of Nominal and Real Shocks written by Laacute;szloacute Szerb and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper concerns the conditions under which borrowers select fixed and adjustable rate mortgages. The novelty of the paper lies in its capability to analyze the effect of nominal and real shocks separately. The fixed rate mortgage (FRM) versus the adjustable rate mortgage (ARM) choice is determined by the expected real interest rate differential, initial wealth, income, expected real and nominal income risk exposure measured by different parameters the value of the house, the appreciation of the house and the influence of the variance of nominal and real shocks. Results differ according to whether or not borrowers are restricted by the loan-to-value constraint.
Download or read book Household Risk Management and Optimal Mortgage Choice written by John Y. Campbell and published by . This book was released on 2008 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: Home mortgages are the most significant financial contract for many households. The form of this contract is correspondingly important. This paper studies the choice between fixed-rate (FRM) and adjustable-rate (ARM) mortgages. In an environment with uncertain inflation, nominal FRMs have risky real capital value whereas ARMs have safe capital value. However ARMs can greatly increase the short-term variability of required real interest payments. This is a serious disadvantage of ARMs for households who face borrowing constraints and have only a small buffer stock of financial assets. The paper uses numerical methods to solve a life-cycle model with risky labor income and borrowing constraints, under alternative assumptions about available mortgage contracts. Households with large mortgages, risky labor income, high risk aversion, and a low probability of moving are more likely to prefer nominal FRMs. The paper also considers inflation-indexed FRMs. These mortgages remove the wealth risk of nominal FRMs without incurring the income risk of ARMs, and therefore are a superior vehicle for household risk management. The paper finds that the welfare gains of mortgage indexation can be very large.
Download or read book Alternative Mortgage Instruments Research Study written by United States. Federal Home Loan Bank Board and published by . This book was released on 1977 with total page 566 pages. Available in PDF, EPUB and Kindle. Book excerpt:
