IDEAS home Printed from https://ideas.repec.org/a/ire/issued/v10n012007p151-170.html
   My bibliography  Save this article

Multifamily Mortgage Lending: A Comparison of the U.S. and Canada

Author

Listed:
  • Cynthia Holmes

    (Florida State University, College of Business, Tallahassee FL, 32306-1110)

  • Michael LaCour-Little

    (California State University, Fullerton, Department of Finance, 2600 E. Nutwood Avenue, 1060-26, Fullerton, CA 92833)

Abstract

We combine loan data from distinct sources to compare and contrast multifamily mortgage lending in Canada and the U.S. After a general comparison of the multifamily housing markets in the two countries, we focus on loan pricing and non-price contract terms in the two environments. We find longer loan terms in the U.S. compared to Canada and attribute this to the greater liquidity available from a more established secondary mortgage market. We also find that while nominal rates are higher in Canada, mortgage spreads are actually lower, a result likely due to contract features that raise the cost of default for borrowers and restrict prepayments". In terms of loan performance, we found greater prepayment risk in U.S. mortgages and greater default risk in Canadian mortgages, although findings regarding default are limited by small sample size.

Suggested Citation

  • Cynthia Holmes & Michael LaCour-Little, 2007. "Multifamily Mortgage Lending: A Comparison of the U.S. and Canada," International Real Estate Review, Global Social Science Institute, vol. 10(1), pages 151-170.
    • Handle: RePEc:ire:issued:v:10:n:01:2007:p:151-170
    as

    Download full text from publisher

    File URL: https://www.gssinst.org/irer/wp-content/uploads/2020/10/vol-10-no-1-multifamily-mortgage-lending.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hernán Ortiz-Molina & María Penas, 2008. "Lending to small businesses: the role of loan maturity in addressing information problems," Small Business Economics, Springer, vol. 30(4), pages 361-383, April.
    2. Steven A. Dennis & Ian G. Sharpe, 2005. "Firm Size Dependence in the Determinants of Bank Term Loan Maturity," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(1‐2), pages 31-64, January.
    3. 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.
    4. Marsha J. Courchane & Judith A. Giles, 2002. "A Comparison of U.S. and Canadian Residential Mortgage Markets," Econometrics Working Papers 0201, Department of Economics, University of Victoria.
    5. Brent W. Ambrose & Michael LaCour‐Little & Anthony B. Sanders, 2004. "The Effect of Conforming Loan Status on Mortgage Yield Spreads: A Loan Level Analysis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(4), pages 541-569, December.
    6. Steven A. Dennis & Ian G. Sharpe, 2005. "Firm Size Dependence in the Determinants of Bank Term Loan Maturity," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(1-2), pages 31-64.
    7. Emily Norman Zietz, 2003. "Multifamily Housing: A Review of Theory and Evidence," Journal of Real Estate Research, American Real Estate Society, vol. 25(2), pages 185-244.
    8. Qiang Fu & Michael LaCour-Little & Kerry D. Vandell, 2003. "Commercial Mortgage Prepayments Under Heterogeneous Prepayment Penalty Structures," Journal of Real Estate Research, American Real Estate Society, vol. 25(3), pages 245-476.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jong Chool Park & Qiang Wu, 2009. "Financial Restatements, Cost of Debt and Information Spillover: Evidence From the Secondary Loan Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(9‐10), pages 1117-1147, November.
    2. Manuel Adelino & Antoinette Schoar & Felipe Severino, 2012. "Credit Supply and House Prices: Evidence from Mortgage Market Segmentation," NBER Working Papers 17832, National Bureau of Economic Research, Inc.
    3. Fang, Sheng & Qian, Xuesong & Zou, Wei, 2020. "The empirical relation between loan risk and collateral in the shadow banking system: Evidence from China’s entrusted loan market," International Review of Economics & Finance, Elsevier, vol. 67(C), pages 42-54.
    4. W. Scott Frame & Lawrence J. White, 2010. "The Industrial Organization of the U.S. Single-Family Residential Mortgage Industry," Working Papers 10-11, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Christophe Godlewski & Laurent Weill, 2011. "Does Collateral Help Mitigate Adverse Selection? A Cross-Country Analysis," Journal of Financial Services Research, Springer;Western Finance Association, vol. 40(1), pages 49-78, October.
    6. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 887-986, Elsevier.
    7. Pavel Ševcík, 2012. "Financial Contracts and the Political Economy of Investor Protection," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 163-197, October.
    8. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    9. Jong Chool Park & Qiang Wu, 2009. "Financial Restatements, Cost of Debt and Information Spillover: Evidence From the Secondary Loan Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(9-10), pages 1117-1147.
    10. Weetman, Pauline, 2006. "Discovering the ‘international’ in accounting and finance," The British Accounting Review, Elsevier, vol. 38(4), pages 351-370.
    11. Samuel Jebaraj Benjamin & Zhuoan Feng & Pallab Kumar Biswas, 2023. "Negative Social Media Sentiments and Capital Structure," Capital Markets Review, Malaysian Finance Association, vol. 31(2), pages 1-22.
    12. Robert Eisenbeis & W. Frame & Larry Wall, 2007. "An Analysis of the Systemic Risks Posed by Fannie Mae and Freddie Mac and An Evaluation of the Policy Options for Reducing Those Risks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(2), pages 75-99, June.
    13. ManYing Kang & Marcel Ausloos, 2017. "An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies," Economies, MDPI, vol. 5(4), pages 1-23, November.
    14. Song Zhang & Liang Han & Konstantinos Kallias & Antonios Kallias, 2021. "The value of in-person banking: evidence from U.S. small businesses," Review of Quantitative Finance and Accounting, Springer, vol. 57(4), pages 1393-1435, November.
    15. Kirschenmann, K., 2010. "The Dynamics in Requested and Granted Loan Terms when Bank and Borrower Interact Repeatedly," Other publications TiSEM 40d5005c-1626-4511-aa8a-f, Tilburg University, School of Economics and Management.
    16. Kislat, Carmen & Menkhoff, Lukas & Neuberger, Doris, 2013. "The use of collateral in formal and informal lending," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79765, Verein für Socialpolitik / German Economic Association.
    17. Liu, Benjamin & Skully, Michael, 2005. "The determinants of mortgage yield spread differentials: Securitization," Journal of Multinational Financial Management, Elsevier, vol. 15(4-5), pages 314-333, October.
    18. Yang, Baochen & An, Haokai & Song, Xinyu, 2024. "Oil price uncertainty and corporate inefficient investment: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).
    19. Ahuja, Rishi & Barrett, Sean & Corbet, Shaen & Larkin, Charles, 2019. "A way forward: The future of Irish and European union financial regulation," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 346-360.
    20. Rahman Ashiqur & Rahman M. Twyeafur & Belas Jaroslav, 2017. "Determinants of SME Finance: Evidence from Three Central European Countries," Review of Economic Perspectives, Sciendo, vol. 17(3), pages 263-285, September.

    More about this item

    Keywords

    mortgage; multifamily; international;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ire:issued:v:10:n:01:2007:p:151-170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IRER Graduate Assistant/Webmaster (email available below). General contact details of provider: https://www.gssinst.org/gssinst/index.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.