Adjustable Rate Mortgages and Housing Demand: The Impact of Initial Rate Discounts.
This article investigates the impact of adjustable rate mortgages (ARM) initial rate (teaser) discounts on mortgage choice and housing demand. Because discounted ARM loans may reduce expected user costs, theoretical models predict a positive impact on housing expenditures. To test the hypothesis, a simultaneous model of housing expenditures conditioned upon mortgage instrument choice is estimated using a national sample of transactions for the 1986 to 1988 period. The results indicate that overall housing demand would have been reduced by approximately 13 percent during the period in the absence of ARM loans. Copyright 1992 by Kluwer Academic Publishers
Year of publication: |
1992
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Authors: | Phillips, Richard A ; Vanderhoff, James H |
Published in: |
The Journal of Real Estate Finance and Economics. - Springer. - Vol. 5.1992, 3, p. 269-79
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Publisher: |
Springer |
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