 Homeowner Mobility and Mortgage Interest Rates: New Evidence from the 1990sReal Estate Economics, 2002, vol. 30, issue 3, 345-364 Abstract: When interest rates vary, the value to a homeowner of a mortgage at a fixed interest rate varies as well. In particular, if mortgages are not fully assumable, then when interest rates increase, the value of a preexisting mortgage contract increases as well. Thus, homeowners have an incentive to postpone moving in response to other economic incentives. Similarly, when interest rates decrease, households that had previously postponed moving now have this disincentive removed. The only empirical evidence on the magnitude of this effect is based upon the period of unusual volatility and increasing interest rates in the late 1970s. This paper investigates the importance of these mortgage contracts upon mobility during a more typical environment, the early 1990s, when much lower interest rates declined further. Thus, it investigates the implications for mobility of a decline in the “lock in” effect of mortgage contracts. The paper uses the same data source and methodology that had been used previously to analyze the effects of high interest rates in 1979‐1982 upon homeowner mobility. Date: 2002 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:reesec:v:30:y:2002:i:3:p:345-364 Ordering information: This journal article can be ordered from Access Statistics for this article Real Estate Economics is currently edited by Crocker Liu, N. Edward Coulson and Walter Torous More articles in Real Estate Economics from American Real Estate and Urban Economics Association Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.