Implied Mortgage Refinancing Thresholds
نویسندگان
چکیده
منابع مشابه
Mortgage Refinancing and the Concentration of Mortgage Coupons
In 1998, interest rates on mortgages dropped to their lowest levels in nearly five years, prompting a record amount of refinancing activity. Refinancings typically rise following a drop in rates as homeowners seek to capture interest savings. The 1998 surge, however, was strikingly large relative to the size of the interest rate declines that triggered it. From mid-1997 to early 1998, thirty-ye...
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Refinancing a mortgage is often one of the biggest and most important financial decisions that people make. Borrowers need to choose the interest rate differential at which to refinance and, when that differential is reached, they need to take the steps to refinance before rates change again. The optimal differential is where the interest saved by refinancing equals the sum of refinancing costs...
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We derive the first closed-form optimal refinancing rule: Refinance when the current mortgage interest rate falls below the original rate by at least [Formula: see text] In this formula W(.) is the Lambert W-function, [Formula: see text]ρ is the real discount rate, λ is the expected real rate of exogenous mortgage repayment, σ is the standard deviation of the mortgage rate, κ/M is the ratio of ...
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Does advertising help consumers to find the products they need or push them to buy products they don’t need? In this paper, we study the effects of advertising on consumer mistakes and quantify the resulting effect on consumer welfare in the market for mortgage refinancing. Mortgage borrowers frequently make costly refinancing mistakes by either refinancing when they should wait, or by waiting ...
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This paper summarizes recent research on a new approach, namely, an equilibrium approach, to the valuation of fixed-rate mortgage contracts. Working in a discrete time setting with the mortgagor’s prepayment behavior described by a suitable intensity process and with exogenous mortgage rates, the value of the contract is derived in an explicit form that can be interpreted as the principal balan...
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ژورنال
عنوان ژورنال: Real Estate Economics
سال: 2000
ISSN: 1080-8620,1540-6229
DOI: 10.1111/1540-6229.00807