Abstract

http://ssrn.com/abstract=1684730
 


 



Housing Tenure and Mortgage Choice


Elaine Fortowsky


Federal National Mortgage Association (Fannie Mae)

Michael LaCour-Little


California State University at Fullerton

Eric Rosenblatt


Federal National Mortgage Association (Fannie Mae) - Research

Vincent Yao


Federal National Mortgage Association (Fannie Mae)

September 29, 2010

Journal of Real Estate Finance and Economics, Vol. 42, No. 2, 2011

Abstract:     
This paper examines the relationship between housing tenure and mortgage contract. We present a model showing that, given expected mobility, borrowers will have incentive to self-select into the appropriate mortgage product such that their fixed-rate period is directly related to their probability of moving. We empirically test this hypothesis using housing tenure data derived from a large national database of repeat mortgage transactions. After controlling for borrower characteristics, the mobility hazards of 3/1, 5/1 and 7/1 ARMs, compared to a 30-year fixed rate, are estimated to be 28%, 14% and 11% higher, respectively.

Keywords: Mortgage choice, Contract design, Housing tenure, Household mobility

Accepted Paper Series


Not Available For Download

Date posted: October 1, 2010  

Suggested Citation

Fortowsky, Elaine and LaCour-Little, Michael and Rosenblatt, Eric and Yao, Vincent, Housing Tenure and Mortgage Choice (September 29, 2010). Journal of Real Estate Finance and Economics, Vol. 42, No. 2, 2011. Available at SSRN: http://ssrn.com/abstract=1684730

Contact Information

Elaine Fortowsky (Contact Author)
Federal National Mortgage Association (Fannie Mae) ( email )
3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States
Michael LaCour-Little
California State University at Fullerton ( email )
5133 Mihaylo Hall
Fullerton, CA 92834-6848
United States
657-278-4014 (Phone)
657-278-2161 (Fax)
Eric Rosenblatt
Federal National Mortgage Association (Fannie Mae) - Research ( email )
16517 Keats Terrace
Derwood, MD 20855
United States
Vincent Yao
Federal National Mortgage Association (Fannie Mae) ( email )
3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States
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