Determinants of the Arm Share of National and Regional Lending

摘要

The authors model the adjustable-rate mortgage (ARM) share of mortgage lending and provide several unique contributions to the mortgage choice literature. First, they motivate the use of the price spread between fixed- and adjustable-rate credit as a regressor by imposing economic constraints on a general consumer demand model and show that the data support these restrictions. Second, the data span a far longer time period (six years) than previous research. Third, they estimate separate share equations by region, allowing them to contrast geographic variation in consumer mortgage choice. Fourth, they examine the effect of convertible ARMs--which became prevalent in mid-1987--on overall ARM demand.