Choice of Mortgage Contracts: Evidence from the Survey of Consumer Finances
AbstractThis study revisits the empirical question of the determinants of the choice between fixed- and adjustable-rate mortgages using data from the Survey of Consumer Finances that overcome some of the data limitations in previous studies. The results from a logit model of mortgage choice indicate that pricing variables and affordability are important considerations. We also find that factors, such as mobility expectations, income volatility and attitudes toward financial risk largely influence mortgage choice, with more risk-averse borrowers preferring fixed-rate mortgages. For households that are less risk averse, the mortgage type choice decision is less sensitive to pricing variables and income volatility, and affordability factors are not significant. These findings provide empirical support that underscores the importance of attitudes toward risks in mortgage choice. Copyright (c) 2009 American Real Estate and Urban Economics Association.
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Bibliographic InfoArticle provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.
Volume (Year): 37 (2009)
Issue (Month): 4 ()
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Other versions of this item:
- Brahima Coulibaly & Geng Li, 2007. "Choice of mortgage contracts: evidence from the Survey of Consumer Finances," Finance and Economics Discussion Series 2007-50, Board of Governors of the Federal Reserve System (U.S.).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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