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Mortgage innovation and consumer choice

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  • John Krainer

Abstract

As 2006 draws to a close, one economic development that stands out over the year is the slowdown in the housing sector. In particular, the slowdown raises concerns about the perceived shift households have made toward "alternative" mortgage products, which may leave them more exposed to negative effects from higher interest rates and falling house prices. In this Economic Letter, I take a somewhat longer view and put alternative mortgages in the context of the history of innovation in the U.S. mortgage market. I then examine the ways in which this innovation may be affecting the housing consumption decisions facing U.S. households.

Suggested Citation

  • John Krainer, 2006. "Mortgage innovation and consumer choice," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec29.
  • Handle: RePEc:fip:fedfel:y:2006:i:dec29:n:2006-38
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    References listed on IDEAS

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    1. Richard K. Green & Susan M. Wachter, 2005. "The American Mortgage in Historical and International Context," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 93-114, Fall.
    2. 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.
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    Keywords

    Mortgage loans ; Housing - Finance;

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