The effect of housing government-sponsored enterprises on mortgage rates
By: Wayne Passmore, Shane M. Sherlund, and Gillian Burgess.
Contributors: Sherlund, Shane M.; Burgess, Gillian.
Series: Finance and economics discussion series ;; 2005-06; Finance and economics discussion series (Online) ;; 2005-06.
Publisher: Federal Reserve Board
Published: 2005
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Description: "We derive a theoretical model of how jumbo and conforming mortgage rates are determined and how the jumbo-conforming spread might arise.  We show that mortgage rates reflect the cost of funding mortgages and that this cost of funding can drive a wedge between jumbo and conforming rates (the jumbo-conforming spread).  Further, we show how the jumbo-conforming spread widens when mortgage demand is high or core deposits are not sufficient to fund mortgage demand, and tighten as the mortgage market becomes more liquid and realizes economies of scale.  Using MIRS data for April 1997 through May 2003, we estimate that the GSE funding advantage accounts for about seven basis points of the 15-18 basis point jumbo-conforming spread"--Federal Reserve Board web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 2/3/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.