Interest Rates in the Sub-Prime Mortgage Market

Souphala Chomsisengphet and Anthony Pennington-Cross

Chapter Chapter 14 in Household Credit Usage, 2007, pp 237-252 from Palgrave Macmillan

Abstract: Abstract Sub-prime lending has grown rapidly in the mortgage market. According to Inside Mortgage Finance (IMF), sub-prime mortgage lending increased from approximately 65 billion dollars in 1995 to over 213 billion dollars in 2002. This growth accelerated in 2003 as the market grew by another 119 billion dollars to reach 332 billion dollars (IMF 2004).1 By providing access to credit to those otherwise denied a mortgage in the traditional prime market, the sub-prime market can enhance welfare by completing the mortgage market (Chinloy and MacDonald 2005). Sub-prime credit gives more households the opportunity to become homeowners, as well as providing better access to equity held in the home through refinances and second mortgages. Despite the growth in sub-prime lending, little is known about the pricing of the sub-prime credit. This chapter helps fill this gap by examining the determinants of interest rates charged to sub-prime mortgage borrowers.

Keywords: Interest Rate; Mortgage Market; Credit Score; Credit History; Real Estate Finance (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-60891-7_14

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230608917

DOI: 10.1057/9780230608917_14

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().