scholarly journals How Mortgage Finance Reform Could Affect Housing

2016 ◽  
Vol 106 (5) ◽  
pp. 620-624 ◽  
Author(s):  
John V. Duca ◽  
John Muellbauer ◽  
Anthony Murphy
Keyword(s):  
Interest Rates ◽  
House Prices ◽  
Capital Requirements ◽  
Finance Reform ◽  
Fannie Mae ◽  
Mortgage Finance ◽  
Mortgage Interest Rates ◽  
Size Limits ◽  
Loan Size ◽  
The Impact

Although major changes in mortgage finance have occurred since the subprime bust, several issues remain unresolved, centering on the roles of Fannie Mae, Freddie Mac, and the FHA. We analyze how some reforms might affect house prices in a framework rich enough to simulate the impact of several reforms which change mortgage interest rates and/or loan-to-value (LTV) ratios of first time home buyers, the key drivers of house prices in recent decades. Simulations suggest that ending the GSE interest rate subsidy would have small effects, while changes in capital requirements or maximum FHA loan size limits would have larger effects.

Creating a Development Bank to Finance Affordable Housing in South Africa is a Timely Catalyst to Address Demand and Supply Challenges

2020 ◽  
pp. 810-826
Author(s):  
Vuyisani Moss
Keyword(s):  
South Africa ◽  
Interest Rates ◽  
Affordable Housing ◽  
House Price ◽  
Disposable Income ◽  
Development Bank ◽  
Demand And Supply ◽  
Private Sector Participation ◽  
Mortgage Finance ◽  
Mortgage Interest Rates

The twin problems of affordability and accessibility that hamper the progress of housing in our country need to be addressed on a sustainable basis and the state needs to take on the role as a facilitator to create the enabling environment to encourage greater private sector participation. As a consequence, it is quite opportune to establish the Human Settlements Development Bank (HSDB). The mortgage finance affordability challenge is also attributable to key essential drivers, namely; house price index, disposable income, and the mortgage interest rates.

scholarly journals The Interest Rate Elasticity of Mortgage Demand: Evidence from Bunching at the Conforming Loan Limit

2017 ◽  
Vol 9 (1) ◽  
pp. 210-240 ◽  
Author(s):  
Anthony A. DeFusco ◽  
Andrew Paciorek
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Fixed Rate ◽  
Mortgage Debt ◽  
Percentage Point Increase ◽  
Fannie Mae ◽  
The Interest Rate ◽  
Loan Size ◽  
Loan Limit ◽  
Mortgage Demand

This paper provides novel estimates of the interest rate elasticity of mortgage demand by measuring the degree of bunching in response to a discrete jump in interest rates at the conforming loan limit—the maximum loan size eligible for purchase by Fannie Mae and Freddie Mac. The estimates indicate that a 1 percentage point increase in the rate on a 30-year fixed-rate mortgage reduces first mortgage demand by between 2 and 3 percent. One-third of this response is driven by borrowers who take out second mortgages, which implies that total mortgage debt only declines by 1.5 to 2 percent. (JEL D14, G21, R21, R31)

scholarly journals Foreign banks management in the context of a pandemic: problems and solutions

E-Management ◽  
2020 ◽  
Vol 3 (3) ◽  
pp. 4-12
Author(s):  
Sh. U. Niyazbekova
Keyword(s):  
Interest Rates ◽  
Financial Statements ◽  
Capital Requirements ◽  
The Philippines ◽  
Foreign Banks ◽  
World Health ◽  
Physical Interaction ◽  
Management Actions ◽  
General Decline ◽  
The Impact

The article discusses the problems encountered by enterprises in the financial sector in the context of the COVID-19 pandemic. The paper gives examples of management actions of the largest banks in Italy, Brazil, South Korea, China, Portugal, Singapore, the USA, the Philippines and Russia. World Health Organization has advised the population to use contactless payments and reduce the turnover of banknotes to a minimum. The coronavirus has increased the desire of customers to use digital services, making it an urgent need. In fact, the pandemic has led to the fact that Bank customers, who are increasingly afraid to spend time in public places, should be able to conduct banking operations without physical interaction with Bank offices. By implementing fully digital remote customer service, banks must ensure that both routine and unique (one-time, specific) banking processes will be performed without loss or disruption. Under these circumstances, financial institutions will be required to disclose information about the impact of the coronavirus pandemic on their operations in financial statements based on the relevant disclosure standards (Generally Accepted Accounting Principles, GAAP and United States Securities and Exchange Commission, SEC). Disclosure of financial statements may include risk factors such as Fund depreciation, reduced liquidity, and other aspects.The downward trend in interest rates as required by governments and national banking regulators may affect the profitability of banks. Along with a General decline in business activity, this will lead to a decrease in Bank profits. Analysts’ concerns have already resulted in a sharp drop in the share prices of many firms, which creates another problem because some deferred tax assets, such as net operating losses (NOL), are not fully accounted for in the Bank’s regulatory capital requirements. National governments impose industry-specific tax requirements on capital market enterprises, but the challenges they will face when filing and paying direct and indirect taxes are likely to be similar to those faced by other industries.

Monetary policy influences in Australian housing markets

2015 ◽  
Vol 8 (2) ◽  
pp. 265-286 ◽  
Author(s):  
Gregory Costello ◽  
Patricia Fraser ◽  
Garry MacDonald
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
House Prices ◽  
Housing Markets ◽  
Empirical Method ◽  
Capital City ◽  
Monetary Policy Shocks ◽  
Content Type ◽  
Policy Shocks ◽  
The Impact

Purpose – This paper aims to analyze the impact of common monetary policy shocks on house prices at national and capital city levels of aggregation, using Australian data and the Lastrapes (2005) two-part structural vector autoregressive (SVAR) empirical method. Design/methodology/approach – The Lastrapes (2005) two-part SVAR empirical method is applied to Australian housing market and macroeconomic data to assess the impact of common monetary policy shocks on house prices. Findings – Results show that while the impact of shocks to interest rates on aggregate house prices is almost neutral, the responses of state capital city house prices to the same shock can exhibit significant asymmetries. Originality/value – This paper contributes to the monetary policy–asset price debate by examining the influence of Australian monetary policy on capital city housing markets over the period 1982-2012. To the authors’ knowledge, this is the first empirical study that has adapted this Lastrapes (2005) methodology to the analysis of housing markets.

LIBOR, base rate spreads and the UK housing market

2015 ◽  
Vol 8 (1) ◽  
pp. 118-134 ◽  
Author(s):  
Martin Hinch ◽  
Jim Berry ◽  
William McGreal ◽  
Terry Grissom
Keyword(s):  
Time Series ◽  
Interest Rates ◽  
House Prices ◽  
House Price ◽  
Base Rate ◽  
Percentage Change ◽  
Content Type ◽  
Change Models ◽  
The Uk ◽  
The Impact

Purpose – The purpose of this paper is to analyse how London Interbank Offered Rate Index (LIBOR) and the spread between LIBOR and the base rate of interest as set by the Bank of England (BoE) influences the variation in house prices in the UK. Design/methodology/approach – This paper uses monthly data over a long time series, since 1986, to investigate the relationships between house price and LIBOR. Data are drawn from several different sources to include housing, financial and macro-economic variables. The time series is sub-divided into a series of splines based on stages in the economic and property market cycle. Both value-based and percentage change models are developed. Findings – The results show that BoE base/LIBOR margin variable has a strong positive and significant effect on house price; however, the percentage change model infers a weaker and inverse relationship. The spline analysis re-emphasised the significance of the BoE base/LIBOR margin variable. Where variation between base rates and LIBOR is reduced, a significant positive effect can be observed in the average house price; however, where significant variation exists, the BoE base/LIBOR margin has little effect and LIBOR itself becomes a significant driver. Research limitations/implications – The results highlight that the predictive qualities of the BoE base/LIBOR margin, as the contribution of this margin to the explanation of house price, exceeds both the base rate and LIBOR variables individually. Also highlighted is the contribution of unemployment to the explanation of house price. In both the value and percentage change models, unemployment is shown as a negative and highly significant contributor. Originality/value – Previous papers have demonstrated the important linkage between house price and interest rates, the originality in this paper lies in examining the impact of LIBOR and the spreads between LIBOR and base rate as key variables influencing variation in UK house prices.

scholarly journals Mortgage volume and macroeconomic factors: Evidence from Turkey

2021 ◽  
Vol 9 (4) ◽  
pp. 1504-1520
Author(s):  
Tuğba Güneş ◽  
Ayşen Apaydın
Keyword(s):  
Interest Rates ◽  
House Prices ◽  
Mortgage Market ◽  
Mortgage Loan ◽  
Response Analysis ◽  
Mortgage Loans ◽  
Macroeconomic Factors ◽  
Mortgage Interest ◽  
Mortgage Interest Rates ◽  
Turkish Lira

This paper investigates the impacts of several macroeconomic variables on Turkey's volume of mortgage loans. Johansen cointegration test, vector error correction model, Granger causality tests, variance decomposition, and impulse-response analysis is employed for the econometric analysis to show short and long-run relationships between the variables using time series monthly data from January 2010 to March 2020. Paper results demonstrate that growth of housing credit size negatively correlates with mortgage interest rates, US Dollar/Turkish Lira exchange rate and level of real estate supply. At the same time, there is a positive correlation with house prices. Causal relationships between mortgage volume and macroeconomic indicators are bidirectional for all variables, except for mortgage interest rates. There is a one-way causality relationship from mortgage rates to mortgage loan volume. Econometric analyses show that the recent steep depreciation in the Turkish Lira hurts the Turkish mortgage market. In conclusion, a stable economic environment is essential to build a robust mortgage market.

scholarly journals When Does Monetary Policy Sway House Prices? A Meta-Analysis

2021 ◽  
Author(s):  
Dominika Ehrenbergerova ◽  
Josef Bajzik ◽  
Tomas Havranek
Keyword(s):  
Interest Rates ◽  
Yield Curve ◽  
House Prices ◽  
Meta Analysis ◽  
Empirical Literature ◽  
Short Term ◽  
Mortgage Markets ◽  
The Mean ◽  
The Impact

Several central banks have leaned against the wind in the housing market by increasing the policy rate preemptively to prevent a bubble. Yet the empirical literature provides mixed results on the impact of short-term interest rates on house prices: the estimated semi-elasticities range from -12 to positive values. To assign a pattern to these differences, we collect 1,447 estimates from 31 individual studies that cover 45 countries and 69 years. We then relate the estimates to 39 characteristics of the financial system, business cycle, and estimation approach. Our main results are threefold. First, the mean reported estimate is exaggerated by publication bias, because insignificant results are underreported. Second, omission of important variables (liquidity and long-term rates) likewise exaggerates the effects of short-term rates on house prices. Third, the effects are stronger in countries with more developed mortgage markets and generally later in the cycle when the yield curve is flat and house prices enter an upward spiral.

scholarly journals The Impact Of Basel III On Italian Banks Loan Rates: An Accounting-Based Approach

2012 ◽  
Vol 11 (11) ◽  
pp. 1269
Author(s):  
Pasquale Di Biase
Keyword(s):  
Interest Rates ◽  
Banking System ◽  
Bank Lending ◽  
Capital Requirements ◽  
Bank Loans ◽  
Bank Loan ◽  
Basel Iii ◽  
Baseline Scenario ◽  
Percentage Point Increase ◽  
The Impact

This paper empirically investigates the impact of the new capital requirements imposed under Basel III on bank lending rates.A general accounting equilibrium model is developed in order to map the change in the average interest rate on bank loans which is required to preserve the economic performance and the market value of financial institutions under the new regulatory framework.The study refers to the Italian banking system. According to our estimates, the long-term impact of heightened capital requirements on bank loan rates is likely to be modest.In our baseline scenario, we find evidence that each percentage point increase in the capital ratio can be recovered by increasing interest rates with which borrowers are charged by only 5.75 basis points. We conclude that the Italian banking system should be able to adjust to the higher capital requirements imposed by Basel III through a set of operative and commercial levers with no significant effects on the cost of credit for companies and consumers.

scholarly journals Microfinance is a Non-productive and Expensive Source of Borrowing: A Case Study of District Sargodha (Pakistan)

2020 ◽  
Vol 2 (1) ◽  
pp. 1-5
Author(s):  
Tahir Mahmood ◽  
Allah Bakhsh
Keyword(s):  
Interest Rates ◽  
Farm Size ◽  
Productive Capacity ◽  
Microfinance Institutions ◽  
Feed Cost ◽  
Large Farm ◽  
Livestock Productivity ◽  
Loan Size ◽  
The Impact ◽  
Loan Amount

The study examines Pakistan’s microfinance institutions' performance and checks the productivity of microfinance institutions. For this purpose primary data was collected from a sample of 260 respondents from 6 microfinance banks in Sargodha District. This paper examined the livestock sector and the impact of microfinance on livestock productivity. According to the results of the role of microfinance was non-productive due to the high cost of borrowing, small loan size, high feed cost and use of the loan in a non-productive term. According to the results microfinance productivity is negative due to small loan size and high cost of borrowing. While the productivity of borrowing amount for large farm size is positive which is three times greater as compared to small farm size. So results showed that the efficiency of production increase through large scale farming. Small loan size and high cost of borrowing is a basic cause of negative microfinance productivity. Small loan size is not benefited for investment because the loan amount is unable to meet the basic requirements at the farm level for the increase in productivity of livestock farming. The main reason for the high productivity of livestock financing in large farming is due to its economies of size. Replacement of dilapidated equipment with modern equipment is one way to increase productivity in an organization. Large loan size decreases the inefficiency in input costs. The major three factors of livestock productivity are the amount of interest rates, milk production and feed cost which are responsible to make efficient use of loan amount in its productivity. Productive capacity is a basic characteristic of large farm size and loan productivity depends on productive capacity.

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