Heterogeneous Homebuyers, Mortgage Choice and the use of Mortgage Brokers

David Duffy and Maurice Roche

Economics Department Working Paper Series from Department of Economics, National University of Ireland - Maynooth

Abstract: Choosing a mortgage product in the face of labor income risk, interest rate risk and borrowing constraints is one of the most important decisions facing a household. This paper investigates the choice between a variety of fixed rate mortgages and adjustable rate mortgages. We find that households with a high loan-to-value ratio, risky income and high risk aversion are more likely to choose a fixed rate mortgage. Choosing a mortgage product relies market search and information. The paper finds that in general first-time homebuyers and those with a high loan-to-value ratio are more likely to use a mortgage broker.

Keywords: Mortgage choice; First-time homebuyer; Mortgage broker (search for similar items in EconPapers)
JEL-codes: E40 G21 R51 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2005-02
New Economics Papers: this item is included in nep-fin, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:may:mayecw:n1520205

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