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Mortgage Prepayment Behavior in a Market with ARMs only

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    Abstract

    A study on the prepayment behavior of Hong Kong mortgage loans is conducted. With all of the loans as adjustable-rate mortgages (ARMs), we find that 1) Prepayment speeds up and then slows down as the mortgage seasons; 2) Prepayment speeds up as the rate markup decreases; 3) Prepayment speeds up as the interest rate increases; 4) Prepayment speeds up when the profitability ratio of the banks ( the prime-HIBOR spread) is higher; 5) Prepayment speeds up as the price of the property market falls; 6) Prepayment speed is faster for loans with a lower loan-to-value ratio; 7) Prepayment exhibits a seasonal pattern: people tend to prepay in the summer.

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    File URL: http://www.umac.mo/fba/irer/papers/past/vol1_pdf/064-080HK.pdf
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    Bibliographic Info

    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 1 (1998)
    Issue (Month): 1 ()
    Pages: 64-80

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    Handle: RePEc:ire:issued:v:01:n:01:1998:p:64-80

    Contact details of provider:
    Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web page: http://www.asres.org/

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    Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
    Email:
    Web: http://www.asres.org/

    Related research

    Keywords: Prepayment function; Adjustable-rate mortgages; Proportional-hazard model;

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    Cited by:
    1. Nai Jia Lee, 2003. "Expected Return of Housing and Mortgage Termination," International Real Estate Review, Asian Real Estate Society, vol. 6(1), pages 75-101.

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