Do Borrowers Make Rational Choices on Points and Refinancing?

24 Pages Posted: 21 Dec 2009

See all articles by Yan Chang

Yan Chang

Federal Home Loan Mortgage Corporation (FHLMC)

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Abstract

Utilizing individual mortgage data, we find that borrowers with points are less likely to refinance, and when they do, they take longer to refinance. This finding supports the separating equilibrium prediction of earlier studies that borrowers with higher (lower) refinancing costs self-select into mortgages with higher-point/lower-rate (lower-point/higher-rate) loans.

Suggested Citation

Chang, Yan and Yavas, Abdullah, Do Borrowers Make Rational Choices on Points and Refinancing?. Real Estate Economics, Vol. 37, No. 4, pp. 635-658, Winter 2009. Available at SSRN: https://ssrn.com/abstract=1525092 or http://dx.doi.org/10.1111/j.1540-6229.2009.00258.x

Yan Chang (Contact Author)

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

8200 Jones Branch Road
McLean, VA 22101
United States

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
2
Abstract Views
342
PlumX Metrics