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Did the housing boom affect mortgage choices?

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Author Info

  • Fred Furlong
  • Yelena Takhtamanova

Abstract

Rapid house price appreciation during the housing boom significantly influenced homebuyer selection of adjustable-rate mortgages over fixed-rate mortgages. In markets with high house price appreciation, house price gains directly influenced mortgage choice. But in markets with less appreciation, price gains did not influence borrower choices between adjustable or fixed-rate mortgages. In addition, the influence of fundamental drivers of mortgage choice, such as mortgage interest rate margins, tended to be muted in markets with high price appreciation.

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File URL: http://www.frbsf.org/publications/economics/letter/2012/el2012-33.html
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File URL: http://www.frbsf.org/publications/economics/letter/2012/el2012-33.pdf
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Bibliographic Info

Article provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.

Volume (Year): (2012)
Issue (Month): nov5 ()
Pages:

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Handle: RePEc:fip:fedfel:y:2012:i:nov5:n:2012-33

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Related research

Keywords: Housing - Prices ; Mortgages;

References

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  1. Mark Doms & John Krainer, 2007. "Innovations in mortgage markets and increased spending on housing," Working Paper Series 2007-05, Federal Reserve Bank of San Francisco.
  2. Gregory Elliehausen & Min Hwang, 2010. "Mortgage contract choice in subprime mortgage markets," Finance and Economics Discussion Series 2010-53, Board of Governors of the Federal Reserve System (U.S.).
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Cited by:
  1. Furlong, Frederick T. & Lang, David & Takhtamanova, Yelena, 2014. "Drivers of mortgage choices by risky borrowers," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.

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