Author: William Carl LaFayettePublisher:
ISBN:
Category : Mortgage loans
Languages : en
Pages : 209
Book Description
Mortgage Choice, Tenure Choice, and Housing Demand in the Presence of Mortgage Qualification Constraints
Author: William Carl LaFayettePublisher:
ISBN:
Category : Mortgage loans
Languages : en
Pages : 209
Book Description
Mortgage Choice, Tenure Choice, and Housing Demand in the Presence of Mortgage Qualifications Constraints
Author: William Carl LaFayettePublisher:
ISBN:
Category :
Languages : en
Pages : 418
Book Description
Endogenous Mortgage Choice, Borrowing Constraints and the Tenure Decision
Author: William C. LaFayettePublisher:
ISBN:
Category : Home ownership
Languages : en
Pages : 29
Book Description
Earlier research has shown that lender income and wealth constraint ratios discourage homeownership. This empirical research has been based on home purchasers using an 80 percent loan-to-value (LTV) fixed-rate conventional loan. Employing the same assumption, we find that the constraints lowered the ownership rate of our 1919 young home purchasers by about 20 percentage points. However, households are not restricted to putting 20 percent down and choosing a fixed- rate loan. When we allow households to select the optimal LTV and mortgage type (adjustable or fixed-rate with Federal Housing Administration (FHA) or conventional insurance), the percentage of our sample that is credit constrained declines from 71 to 49. Moreover, the measured impact on the homeownership rate of the constraints falls to only 4 percentage points. Further, FHA loans are estimated to increase homeownership by only 0.1 to 0.2 percentage points
Endogenous Mortgage Choice, Borrowing Constraints and the Tenure Decision
Author: William C. LaFayettePublisher:
ISBN:
Category :
Languages : en
Pages : 36
Book Description
Earlier research has shown that lender income and wealth constraint ratios discourage homeownership. This empirical research has been based on home purchasers using an 80 percent loan-to-value (LTV) fixed-rate conventional loan. Employing the same assumption, we find that the constraints lowered the ownership rate of our 1919 young home purchasers by about 20 percentage points. However, households are not restricted to putting 20 percent down and choosing a fixed- rate loan. When we allow households to select the optimal LTV and mortgage type (adjustable or fixed-rate with Federal Housing Administration (FHA) or conventional insurance), the percentage of our sample that is credit constrained declines from 71 to 49. Moreover, the measured impact on the homeownership rate of the constraints falls to only 4 percentage points. Further, FHA loans are estimated to increase homeownership by only 0.1 to 0.2 percentage points.
Wealth Effects on Households' Tenure Choice, Housing Demand and Housing Finance Decisions
Author: Lawrence D. JonesPublisher:
ISBN:
Category : House buying
Languages : en
Pages : 221
Book Description
This study investigates the importance of nonhuman wealth endowments and portfolio balance objectives as determinants of a series of family housing decisions. These decisions include i) tenure choice, and for those families choosing the ownership mode, ii) the amount of housing demand and iii) the debt/equity financing structure utilized to acquire and maintain the housing asset. The presence of the study is that tenure choice, housing demand and housing finance issues cannot be understood in a format which fails to include wealth and portfolio considerations as major factors. The analysis is premised upon the a priori conceptual belief that these variables ought to dominate traditional income flow and demographic attribute variables in explaining these household decisions.
The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice
Author: Matthew ChambersPublisher:
ISBN:
Category :
Languages : en
Pages : 45
Book Description
The objective of this paper is to understand how loan structure affects (i) the borrower's selection of a mortgage contract and (ii) the aggregate economy. We develop a quantitative equilibrium theory of mortgage choice where households can choose from a menu of long-term (nominal) mortgage loans. The model accounts for observed patterns in housing consumption, ownership, and portfolio allocations. We find that the loan structure is a quantitatively significant factor in a household's housing finance decision. The model suggests that the mortgage structure preferred by a household is dependent on age and income and that loan products with low initial payments offer an alternative to mortgages with no downpayment. These effects are more important when inflation is low. The presence of inflation reduces the real value of the mortgage payment and the outstanding loan overtime reducing mobility. Changes in the structure of mortgages have implications for risk sharing.
Simultaneous Estimation of Housing Demand and Mortgage Demand
Author: Man ChoPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
This paper establishes an econometric model for analyzing four inter-related decisions at the time of home purchase, including tenure choice, demand for housing services, choice of mortgage instrument, and decision on the amount of borrowed funds. The modeling approach employed by the study is a switching-simultaneous equation model. First, we model two sequential decisions of tenure choice and choice of mortgage type (between fixed-rate (FRM) and adjustable-rate (ARM) mortgages). Second, we specify the demand for housing services and the decision on loan-to-value (LTV) ratios as a regime-switching simultaneous model by controlling for the selectivity biases caused by the two choice factors. The empirical estimates from the model are based on two data sources: the American Housing Survey and a sample of Fannie Mae loan acquisition data. The Fannie Mae data are compiled through a synthetic matching sampling method. Our results indicate that the patterns of housing and mortgage demand are noticeably distinct between borrowers choosing ARMs versus borrowers choosing FRMs. For example, the LTV ratios significantly raise the levels of housing demand for FRM borrowers, but not for ARM borrowers, thus implying that the ARM contract tends to mitigate the effect of the wealth constraint in mortgage borrowing.
Tenure Choice, Mortgage Choice, and Lender Behaviour in the Housing Market of England and Wales
Author: Philomena M. BaconEssays in Housing Choices and Consumer Behavior
Author: Li MaPublisher:
ISBN:
Category :
Languages : en
Pages : 94
Book Description
The third chapter "The Impact of Borrowing Constraints on the Homeownership of Chinese Households" addresses the effect of borrowing constraints in the mortgage market on the tenure choice of Chinese households. The termination of housing allocation system in 1994 is one of the most important reforms in Chinese economy during past decades. Millions of Chinese households became homeowners after this housing reform, and a market-based housing system was established. Since then, Chinese housing mortgage market has boomed and by 2005 China had become the largest residential mortgage market in Asia. This chapter examines the effect of borrowing constraints in mortgage market on the tenure choice of Chinese households. The result shows that few Chinese households are constrained by the down payment criterion. With limited lending sources and a relatively high housing price-to-income ratio, they are more likely to be constrained by the income criterion. Empirical work indicates that a one thousand dollar increase in the family's permanent income increases the likelihood of owning a housing unit by 11.8%. Moreover, highly income-constrained households are 8.6% less likely to become homeowners.
Author: Hsiu-Wen Wu