The Borrower's Choice of Fixed and Adjustable Rate Mortgages in the Presence of Nominal and Real Shocks
作者:
László Szerb,
期刊:
Real Estate Economics
(WILEY Available online 1996)
卷期:
Volume 24,
issue 1
页码: 43-54
ISSN:1080-8620
年代: 1996
DOI:10.1111/1540-6229.00679
出版商: Blackwell Publishing Ltd
数据来源: WILEY
摘要:
This paper concerns the conditions under which borrowers select fixed and adjustable rate mortgages. The novelty of the paper lies in its capability to analyze the effect of nominal and real shocks separately. The fixed rate mortgage (FRM) versus the adjustable rate mortgage (ARM) choice is determined by the expected real interest rate differential, initial wealth, income, expected real and nominal income risk exposure—measured by different parameters—the value of the house, the appreciation of the house and the influence of the variance of nominal and real shocks. Results differ according to whether or not borrowers are restricted by the loan‐to‐value con
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