Structural change in the mortgage market and the propensity to refinance

被引:42
作者
Bennett, P [1 ]
Peach, R [1 ]
Peristiani, S [1 ]
机构
[1] Fed Reserve Bank New York, Res Dept, New York, NY 10045 USA
关键词
D O I
10.2307/2673930
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
We hypothesize that the intrinsic benefit required to trigger a refinancing has become smaller, due to a combination of technological, regulatory, and structural changes that have made mortgage origination more competitive and more efficient and have raised financial awareness of homeowners. To test this hypothesis, we estimate an empirical hazard model of loan survival for two subperiods, using a database that allows us to carefully control for homeowners' credit ratings, equity, loan size, and measurable transaction costs. Our findings strongly confirm that credit ratings and home equity have significant effects on the refinancing probability. In addition, we provide evidence that homeowners postpone refinancing in the face of increased interest rate volatility, consistent with option value theory. Finally, our results support the hypothesis that structural change in the mortgage market has increased homeowners' propensity to refinance.
引用
收藏
页码:955 / 975
页数:21
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