The Margin Paradox in Adjustable-Rate Mortgages

Sprecher, C. Ronald; Willman, Elliott S.

doi:10.1006/jhec.1998.0227

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Cited by 4 publications

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“…In addition, loans with broad caps (less likely to be binding) on interest rate adjustments pay a lower spread because the borrower is assuming more of the interest rate risk. However, inconsistent with the theory, but consistent with prior empirical estimates, the variance of the index is associated with lower spreads (Sprecher and Willman 1998).…”

Section: Resultsmentioning

confidence: 86%

Predatory Lending Laws and the Cost of Credit

Pennington‐Cross¹,

Ho²

2008

Real Estate Economics

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Various states and other local jurisdictions have enacted laws intending to reduce predatory and abusive lending in the subprime mortgage market. These laws have created substantial geographic variation in the regulation of mortgage credit. This article examines whether these laws are associated with a higher or lower cost of credit. Empirical results indicate that the laws are associated with at most a modest increase in cost. However, the impact depends on the product type. In particular, loans with fixed (adjustable) rates are associated with a modest increase (decrease) in cost.

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Section: Resultsmentioning

confidence: 86%