Posted Rates and Mortgage Lending Activity

J. OF REAL ESTATE FINANCE AND ECONOMICS, Vol. 13 No. 2

Posted: 11 Apr 1997

See all articles by Robert B. Avery

Robert B. Avery

Board of Governors of the Federal Reserve System

Patricia E. Beeson

University of Pittsburgh - Office of the Provost

Mark S. Sniderman

Federal Reserve Bank of Cleveland

Abstract

In many metropolitan areas (MSAs) newspapers post mortgage terms for lenders in a manner designed to permit an easy comparison of discount points and note rates. Using these advertised rates for 73 lenders in three MSAs we examine 1) how applicants respond to short-run changes in relative rates, and 2) the relationship between the services provided, and quality of applications received, by lenders and their long-term market positions. We find that applicant flows increase when lenders lower their rates. We also find that persistent cross-lender differences in rates are associated with differences in product quality reflected in processing times, loan sales, and FHA/VA lending; and that high-risk borrowers tend to apply to lenders posting above average rates.

JEL Classification: G21

Suggested Citation

Avery, Robert B. and Beeson, Patricia E. and Sniderman, Mark S., Posted Rates and Mortgage Lending Activity. J. OF REAL ESTATE FINANCE AND ECONOMICS, Vol. 13 No. 2, Available at SSRN: https://ssrn.com/abstract=9251

Robert B. Avery (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2906 (Phone)
202-452-5295 (Fax)

Patricia E. Beeson

University of Pittsburgh - Office of the Provost ( email )

Pittsburgh, PA 15260
United States

Mark S. Sniderman

Federal Reserve Bank of Cleveland ( email )

P.O. Box 6387
Cleveland, OH 44101-1387
United States

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