Abstract
This chapter describes the national housing and mortgage markets. It focuses on the aggregate measure such as the level of housing starts or the mortgage interest rate. The level of new construction is subject to wide fluctuations and a concern regarding the fluctuation and stabilization of the national economy leads naturally to the study of the fluctuation and stabilization of the housing sector. The level of new construction is very sensitive to the mortgage rate of interest. Multiple-unit dwellings have high loan-to-value ratios and variations in the mortgage rate of interest substantially affect the profitability of a project. Similarly, households finance the purchase of a home usually with a mortgage for well over half the purchase price. Therefore, variations in the mortgage rate of interest substantially affect the owner-perceived price. The interest rate, however, does not capture all of the effect of the mortgage market on housing starts. Variations in the various terms of a mortgage affect the comprehensively measured profit to a developer or comprehensively measured price to a household; those terms also affect the level of housing starts.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.