CREDIT AVAILABILITY AND ECONOMIC DECISIONS - SOME EVIDENCE FROM THE HOUSING AND MORTGAGE MARKETS

TWO TYPES OF EVIDENCE ARE CONSIDERED ON THE EFFECT OF AVAILABILITY. LONG-TERM DATA SHOW THAT HOUSING STOCKS HAVE GROWN AT APPROXIMATELY THE SAME RATE AS OTHER ASSETS AND MUCH LESS THAN MORTGAGE CREDIT. ECONOMETRIC STUDIES OF THE MORTGAGE MARKET SHOW NO SUBSTANTIAL EFFECT OF MORTGAGE TERMS AND CONDIT...

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Bibliographic Details
Published in:	The Journal of finance (New York) Vol. 29; no. 3; p. 763
Main Author:	Meltzer, A H
Format:	Journal Article
Language:	English
Published:	Cambridge Blackwell Publishers Inc 01-06-1974
Subjects:	Availability Credit Housing Markets Mortgages Studies
Online Access:	Get full text
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Summary:	TWO TYPES OF EVIDENCE ARE CONSIDERED ON THE EFFECT OF AVAILABILITY. LONG-TERM DATA SHOW THAT HOUSING STOCKS HAVE GROWN AT APPROXIMATELY THE SAME RATE AS OTHER ASSETS AND MUCH LESS THAN MORTGAGE CREDIT. ECONOMETRIC STUDIES OF THE MORTGAGE MARKET SHOW NO SUBSTANTIAL EFFECT OF MORTGAGE TERMS AND CONDITIONS, OTHER THAN RATES ON THE SUPPLY OR DEMAND FOR MORTGAGE LOANS. THREE PRINCIPAL FINDINGS EMERGE - 1. BORROWERS' SUPPLY OF MORTGAGE LOANS TO LENDING INSTITUTIONS IS HIGHLY INTEREST-RATE ELASTIC. 2. SMALL CHANGES IN THE STOCK OF MORTGAGES HAVE LITTLE EFFECT ON THE MORTGAGE RATE. 3. TERMS AND CONDITIONS OTHER THAN MORTGAGE RATES HAVE LITTLE INDEPENDENT EFFECT. THERE IS SUBSTANTIAL SUBSTITUTION BETWEEN TYPES OF BORROWING. IF THE HOUSING MARKET IS THE MARKET IN WHICH AVAILABILITY MATTERS OR MATTERS MOST, THERE APPEARS TO BE VERY LITTLE IF ANY EMPIRICAL BASIS FOR THE PUBLIC POLICIES BASED ON IT OR FOR THE CONJECTURE ITSELF. CHARTS.
ISSN:	0022-1082 1540-6261