Economics, Econometrics and Finance
4 years ago

Interest rate volatility reshaping mortgage terms and lender returns.

National Bureau of Economic Research
The Economics of Mortgage Terminations: Implications for Mortgage Lenders and Mortgage Terms
Patric H. Hendershott, Sheng Cheng Hu, Kevin E. Villani

Paper Summary

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Unlocking the Power of Mortgages for Better Credit Refinancing Options

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The article explores why people decide to refinance or assume mortgages. By using economic models, the researchers found out what factors influence these decisions. They then tested different scenarios to see when households are likely to refinance or assume a mortgage. The results show how changes in interest rates can affect mortgage lenders' profits and the terms of mortgage contracts.