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Mortgage Prepayment Behavior in a Market with ARMs only

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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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
Web page: http://www.asres.org/

Order Information: Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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