[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3770.html
   My bibliography  Save this paper

An Altered U.S. Housing Finance System: Implications for Housing

Author

Listed:
  • Patric H. Hendershott
Abstract
During the 1960s and 1970s, the U.S. government closely regulated the single-family housing finance system. The regulation manifested itself in a highly specialized system with four notable characteristics: portfolio restrictions against investments in corporate assets, tax inducements to invest in residential mortgages, prohibitions against investing in ARMS, and deposit rates ceilings. All were removed in the 1980s, and, not surprisingly, the housing finance system changed markedly. Between early 1982 and 1989, two-fifths of all new loans had adjustable, not fixed, rates, and savings and loans reduced their holdings of FRMs (both whole loans and mortgage pass-throughs) by 15 to 20 percent. Moreover, the fraction of conventional FRM originations that have been pooled into pass-throughs rose from less than one-twentieth before 1981 to over one-half after 1985. With the opportunity of borrowers to shift to lower coupon ARMs when rates rise and with the integration of the home mortgage market with capital markets generally, one would expect that the U.S. housing sector is now less sensitive to rising interest rates than it was in the 1960s and 1970s. Numerous studies support this expectation.

Suggested Citation

  • Patric H. Hendershott, 1991. "An Altered U.S. Housing Finance System: Implications for Housing," NBER Working Papers 3770, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3770
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3770.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Randall Pozdena, 1990. "Do interest rates still affect housing?," Economic Review, Federal Reserve Bank of San Francisco, issue Sum, pages 3-14.
    2. Lawrence D. Jones, 1989. "Current Wealth and Tenure Choice," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(1), pages 17-40, March.
    3. Adrian W. Throop, 1986. "Financial deregulation, interest rates, and the housing cycle," Economic Review, Federal Reserve Bank of San Francisco, issue Sum, pages 63-78.
    4. Donald R. Haurin & Patric H. Hendershott & David C. Ling, 1987. "Homeownership Rates of Married Couples: An Econometric Investigation," NBER Working Papers 2305, National Bureau of Economic Research, Inc.
    5. Rosen, Harvey S & Rosen, Kenneth T, 1980. "Federal Taxes and Homeownership: Evidence from Time Series," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 59-75, February.
    6. John Ryding, 1990. "Housing finance and the transmission mechanism of monetary policy," Research Paper 9008, Federal Reserve Bank of New York.
    7. Patric H. Hendershott & Kevin E. Villani, 1980. "Residential Mortgage Markets and the Cost of Mortgage Funds," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 8(1), pages 50-76, March.
    8. Hendershott, Patric H. & Van Order, Robert, 1989. "Integration of mortgage and capital markets and the accumulation of residential capital," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 189-210, May.
    9. Brueckner, Jan K. & Follain, James R., 1989. "ARMs and the demand for housing," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 163-187, May.
    10. M. Akbar Akhtar & Ethan S. Harris, 1986. "Monetary policy influence on the economy-an empirical analysis," Quarterly Review, Federal Reserve Bank of New York, vol. 11(Win), pages 19-34.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:hal:spmain:info:hdl:2441/5221 is not listed on IDEAS
    2. repec:spo:wpmain:info:hdl:2441/5221 is not listed on IDEAS
    3. Jonathan McCarthy & Richard Peach, 2002. "Monetary policy transmission to residential investment," Economic Policy Review, Federal Reserve Bank of New York, vol. 8(May), pages 139-158.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patric H. Hendershott, 1994. "Housing Finance in the United States," NBER Chapters, in: Housing Markets in the United States and Japan, pages 65-86, National Bureau of Economic Research, Inc.
    2. Patric H. Hendershott & Herbert M. Kaufman (ary), 1992. "The market for home mortgage credit: recent changes and future prospects," Proceedings, Federal Reserve Bank of St. Louis, pages 99-127.
    3. Duca, John V., 1998. "Assessing Monetary Policy and Deposit Deregulation," Journal of Economics and Business, Elsevier, vol. 50(1), pages 3-21, January.
    4. John V. Duca, 1995. "Regulatory changes and housing coefficients," Working Papers 9512, Federal Reserve Bank of Dallas.
    5. Amelia Pais, 2008. "Securitization and Rate Setting in the UK Mortgage Market," International Review of Finance, International Review of Finance Ltd., vol. 8(1‐2), pages 57-80, March.
    6. Hasan, Mohammad S. & Taghavi, Majid, 2002. "Residential investment, macroeconomic activity and financial deregulation in the UK: an empirical investigation," Journal of Economics and Business, Elsevier, vol. 54(4), pages 447-462.
    7. Jonathan McCarthy & Richard Peach, 2002. "Monetary policy transmission to residential investment," Economic Policy Review, Federal Reserve Bank of New York, vol. 8(May), pages 139-158.
    8. Duebel, Hans-Joachim & Brzeski, W. Jan & Hamilton, Ellen, 2006. "Rental choice and housing policy realignment in transition : post-privatization challenges in the Europe and Central Asia region," Policy Research Working Paper Series 3884, The World Bank.
    9. Patric H. Hendershott & Kevin E. Villani, 1981. "Housing Finance in the United States in the Year 2001," NBER Working Papers 0739, National Bureau of Economic Research, Inc.
    10. William C. LaFayette & Donald R. Haurin & Patric H. Hendershott, 1995. "Endogenous Mortgage Choice, Borrowing Constraints and the Tenure Decision," NBER Working Papers 5074, National Bureau of Economic Research, Inc.
    11. Paul Bennett, 1990. "The influence of financial changes on interest rates and monetary policy: a review of recent evidence," Quarterly Review, Federal Reserve Bank of New York, vol. 15(Sum), pages 8-30.
    12. Andrew Feltenstein & Mark Rider & David L. Sjoquist & John V. Winters, 2019. "The Impact of Interstate Mobility on the Effectiveness of Property Tax Reduction in Georgia," Center for State and Local Finance Working Paper Series cslf1907, Andrew Young School of Policy Studies, Georgia State University.
    13. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.
    14. Daniel K. Fetter, 2013. "How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 111-147, May.
    15. Fetter, Daniel K., 2016. "The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership," The Journal of Economic History, Cambridge University Press, vol. 76(4), pages 1001-1043, December.
    16. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2014. "Did Housing Policies Cause the Postwar Boom in Home Ownership?," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 351-385, National Bureau of Economic Research, Inc.
    17. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2009. "Accounting For Changes In The Homeownership Rate," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 677-726, August.
    18. Juan Mora-Sanguinetti, 2012. "Is judicial inefficacy increasing the weight of the house property market in Spain? Evidence at the local level," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(3), pages 339-365, September.
    19. Steven C. Bourassa & Donald R. Haurin & R. Jean Haurin & Patric H. Hendershott, 1994. "Independent Living and Home Ownership: An Analysis of Australian Youth," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(3), pages 29-44, July.
    20. Philomena M. Bacon & Peter G. Moffatt, 2012. "Mortgage Choice as a Natural Field Experiment on Choice under Risk," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(7), pages 1401-1426, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3770. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.