A Note on the Valuation of Mortgage Loan Commitments: Incorporating the Commitment Cost in the Mortgage Rate

George W. Kutner () and James A. Seifert ()
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George W. Kutner: Department of Finance College of Business Administration Marquette University Milwaukee, Wisconsin 53233, http://www.busadm.mu.edu/finance/
James A. Seifert: Department of Finance College of Business Administration Marquette University Milwaukee, Wisconsin 53233, http://www.busadm.mu.edu/finance/

Journal of Real Estate Research, 1990, vol. 5, issue 2, 281-284

Abstract: Kutner and Seifert recently found that mortgage loan commitments have significant financial value. This note presents a procedure that may be used to incorporate this value in the nominal lending rate. The findings indicate that typical lending rates should be augmented by approximately 8 to 44 basis points in order to adequately capture this additional cost.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1990
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