Abstract
We model the ARM share of mortgage lending and provide several unique contributions to the mortgage choice literature. First, we motivate the use of the price spread between fixed- and adjustable-rate credit as a regressor by constraining the effect of FRM and ARM prices to be symmetric and show that the data support this restriction. Second, our data span a far longer time period (six years) than previous research. Third, we estimate separate share equations by region, allowing us to contrast geographic variation in ARM shares. Fourth, we examine the effect of convertible ARMs—which became prevalent in mid-1987—on overall ARM lending.
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Nothaft, F.E., Wang, G.H.K. Determinants of the ARM share of national and regional lending. J Real Estate Finan Econ 5, 219–234 (1992). https://doi.org/10.1007/BF00221531
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DOI: https://doi.org/10.1007/BF00221531