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The Closing Rate on Residential Mortgage Commitments: An Econometric Analysis

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  • Rosenblatt, Eric
  • Vanderhoff, James

Abstract

Mortgage lenders routinely guarantee rates and points for periods of sixty days or more and hedge the inherent interest rate risk by selling the proportion of mortgages expected to close in forward markets. This article presents a model of the decision to close on the mortgage and demonstrates that the estimates of the model increase the precision of closing rate forecasts. The analysis indicates that changes in mortgage rates are important determinants of the closing rate for fixed-rate mortgages (FRM) and adjustable-rate mortgages (ARM). Other important factors include whether the mortgage is for a new purchase, for owner occupancy, and for a single-family house, and what the overall level of mortgage rates and the loan-to-value ratio are and whether the rate guarantee was granted at the application date or later. Copyright 1992 by Kluwer Academic Publishers

Suggested Citation

  • Rosenblatt, Eric & Vanderhoff, James, 1992. "The Closing Rate on Residential Mortgage Commitments: An Econometric Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 5(1), pages 85-98, March.
    • Handle: RePEc:kap:jrefec:v:5:y:1992:i:1:p:85-98
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    Cited by:

    1. Eric Rosenblatt, 1997. "A Reconsideration Of Discrimination In Mortgage Underwriting With Data From A National Mortgage Bank," Journal of Financial Services Research, Springer;Western Finance Association, vol. 11(1), pages 109-131, February.

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