Study to Identify the Existence of Any Housing Credit Market Differentials Between Rural and Other Areas and to Identify Causes of Such Differentials. Volume 6. Statistical Analysis of Outstanding Mortgage Credit Differences Between Urban and Rural Areas

摘要

This research sought to identify the factors contributing to observed inequities in outstanding mortgage credit between urban and rural areas. Possibly contributing to this situation are these factors: (1) lenders offer less favorable mortgage terms in small areas due to an absence of competition; (2) persons in rural areas may prefer less housing and / or less mortgage debt; and (3) the rural population may be less mobile, thereby having paid off a larger percentage of the mortgage debt on the average. The analysis consists of three parts. The first part tests the hypothesis that rural households have fundamentally different preferences than urban households. Of particular concern are the savings versus expenditure decision, the housing versus nonhousing expenditure decision, and the allocation of housing expenditures among various components. To the extent possible, the analysis uses expenditure data and corresponding price and income data to determine whether rural households and urban households with similar household characteristics behave the same when facing similar environments and market conditions. The second part of the analysis addresses the issue of outstanding mortgage credit in urban and rural areas by assuming that the consumer (household), given whatever preferences exist, will take into account the characteristics of the household, local prices, etc., in deciding on the characteristics of the house to be purchased. The analyses involved in the step - by - step process of obtaining mortgage credit are detailed. The next part addresses the potential contribution of lender behavior to outstanding mortgage credit differences between rural and urban areas. Finally, the last part provides some conclusions and policy implications pertinent to the statistical analysis in the first three parts. The ultimate goal of the research is to provide a basis for policy decisions which might appropriately alleviate the problem of inequitable mortgage allocation between urban and rural areas. The study recommends that the reasons why Government - insured loans are much less prevalent in urban and rural areas should be identified, as well as why savings and loan associations are relatively inactive in rural areas. Also, it is suggested that longer term loans and lower down payment requirements need to be made more available in rural areas. Further research to aid in correcting the problem should include strengthening this study's shortcomings, especially the lender analysis; constructing a policy simulation model; and expanding this type of study to include renters and rejected loan applicants. Footnotes and tables are provided.