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Did the housing boom affect mortgage choices?

Frederick Furlong and Yelena Takhtamanova

FRBSF Economic Letter, 2012, issue nov5

Abstract: Rapid house price appreciation during the housing boom significantly influenced homebuyer selection of adjustable-rate mortgages over fixed-rate mortgages. In markets with high house price appreciation, house price gains directly influenced mortgage choice. But in markets with less appreciation, price gains did not influence borrower choices between adjustable or fixed-rate mortgages. In addition, the influence of fundamental drivers of mortgage choice, such as mortgage interest rate margins, tended to be muted in markets with high price appreciation.

Keywords: Housing - Prices; Mortgages (search for similar items in EconPapers)
Date: 2012
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