AN EMPIRICAL STUDY OF MORTGAGE PAYMENTS TO INCOME RATIOS IN A VARIABLE RATE MORTGAGE PROGRAM

DURING A PERIOD WHEN INTEREST INCREASED RAPIDLY AND THE ECONOMY WAS ENTERING A RECESSION, THE VARIABLE-RATE, VARIABLE PAYMENT MORTGAGE (VPM) WAS NOT AN UNDUE BURDEN ON THE MORTGAGOR. OBVIOUSLY, A FIXED-RATE MORTGAGE IS MORE DESIRABLE TO THE BORROWER WHEN INFLATION OCCURS, ASSUMING THAT FINANCING IS...

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Bibliographic Details
Published in:The Journal of finance (New York) 1976-05, Vol.31 (2), p.415
Main Authors: Stansell, Stanley R, Millar, James A
Format: Article
Language:English
Subjects:
Mortgages
Variable interest rates
Online Access:Get full text
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Summary:DURING A PERIOD WHEN INTEREST INCREASED RAPIDLY AND THE ECONOMY WAS ENTERING A RECESSION, THE VARIABLE-RATE, VARIABLE PAYMENT MORTGAGE (VPM) WAS NOT AN UNDUE BURDEN ON THE MORTGAGOR. OBVIOUSLY, A FIXED-RATE MORTGAGE IS MORE DESIRABLE TO THE BORROWER WHEN INFLATION OCCURS, ASSUMING THAT FINANCING IS AVAILABLE. THE SEVERE DISINTERMEDIATION OF MOST THRIFT-INSTITUTIONS DURING THIS PERIOD, WHEN CONTRASTED WITH THE AVAILABILITY OF FUNDS IN THE FEDERAL LAND BANKS' (FLB) VRM PROGRAM, WHICH IS FACILITATED BY THE VARIABLE RATE/VARIABLE PAYMENT FEATURE, SEEMS TO INDICATE THAT FIXED RATE MORTGAGE PROGRAMS HAVE NOT SERVED THE CONSUMER UNDER THESE CONDITIONS. TABLES. REFERENCES.
ISSN:0022-1082
1540-6261