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Determinants of the ARM Share of FHA and Conventional Lending

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  • Berkovec, James A
  • Kogut, David J
  • Nothaft, Frank E
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    Abstract

    Loan-choice research has generally examined the determinants of fixed-rate mortgage (FRM) versus ARM lending in the single-family conventional market. Little attention has been paid to the significant differences in ARM lending between the GSE conforming and jumbo markets, as well as differences in the FHA market. For example, the ARM share of jumbo originations is generally two to three times that of the conforming market. This article extends past analysis by examining the determinants of ARM market share in the conventional conforming, jumbo, and FHA markets. Mortgage-pricing variables and the slope of the Treasury yield curve, a proxy for expectations of the time path of ARM indexes, were generally found to be significant. Further, the geographic shift in FHA lending toward the California market since 1992 was found to explain a significant part of the increase in the ARM share of FHA originations during the mid-1990s. Copyright 2001 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Real Estate Finance & Economics.

    Volume (Year): 22 (2001)
    Issue (Month): 1 (January)
    Pages: 23-41

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    Handle: RePEc:kap:jrefec:v:22:y:2001:i:1:p:23-41

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    Web page: http://www.springerlink.com/link.asp?id=102945

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    Cited by:
    1. Ralph S.J Koijen & Otto Van Hemert & Stijn Van Nieuwerburgh, 2007. "Mortgage Timing," NBER Working Papers 13361, National Bureau of Economic Research, Inc.
    2. Nothaft, Frank E. & Perry, Vanessa G., 2002. "Do mortgage rates vary by neighborhood? Implications for loan pricing and redlining," Journal of Housing Economics, Elsevier, vol. 11(3), pages 244-265, September.

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