Mortgage Market Institutions and Housing Market Outcomes ∗ Edward Kung
نویسنده
چکیده
I develop an equilibrium model of housing and mortgage markets where house prices, mortgage interest rates, and leverage ratios are all determined endogenously. Agents are forward looking and have rational expectations. House prices adjust so that demand from new buyers clears with supply created by existing sellers. Housing demand is affected by the price and availability of contracts in the mortgage market. Mortgage interest rates are set so that the expected return on mortgages is equal to the opportunity cost of funds. Counterfactuals related to mortgage credit availability and mortgage contract design are explored. General equilibrium effects are shown to be important. ∗I thank Patrick Bayer for outstanding advice as well as for providing the DataQuick data. I thank Stuart Gabriel for generously providing the BlackBox data. Additional thanks to Maurizio Mazzocco, John Asker, Till von Wachter, Simon Board, Peter Arcidiacono, Jimmy Roberts, and Alan Collard-Wexler for helpful comments. †Department of Economics, UCLA. E-mail: [email protected].
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