Equilibrium mortgage choice and housing tenure decisions with refinancing
By: by Matthew Chambers, Carlos Garriga, and Don Schlagenhauf
Contributors: Garriga, Carlos; Schlagenhauf, Don E.; Federal Reserve Bank of St. Louis
Series: Working paper -- 2007-049A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-049A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: St. Louis, Mo.]
Language: eng
Format: [electronic resource] /
Subjects: Mortgage loans; Refinancing
Description: "The last decade has brought about substantial mortgage innovation and increased refinancing.  The objective of the paper is to understand the determinants and implications of mortgage choice in the context of general equilibrium model with incomplete markets.  The equilibrium characterization allows us to study the impact of mortgage financing = decisions in the productive economy.  We show the influence of different contract characteristics such as the downpayment requirement, repayment structure, and the amortization schedule for mortgage choice.  We find that loan products that allow for low or no downpayment or an increasing repayment schedule increase the participation of young and lower income households.  We find evidence that the volume of housing transactions increase when the payment profile is increasing and households have little housing equity.  In contrast, we show that loans that allow for a rapid accumulation of home equity can still have positive participation effects without increasing the volatility of the housing market.  The model predicts that the expansion of mortgage contracts and refinancing improves risk sharing opportunities for homeowners but the magnitude varies with each contract"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 11/8/2007.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.