Mortgage Market Research Articles

Consumer Engagement with Financial Content: A Review of Media Influence on Mortgage Decision-Making.

This review examines the multifaceted role of media in shaping consumer engagement with financial content, particularly in the realm of mortgage decision-making. Drawing from a diverse array of studies, it is noted that "media can significantly affect how consumers perceive and process financial information" (Lusardi & Mitchell, 2014). This review critically evaluates how various media forms—from traditional print to digital platforms—impact consumer behavior within the mortgage market. The review is thematically organized to elucidate key findings on media’s impact on decision-making, identify significant gaps in existing research, and highlight crucial areas warranting further exploration. Conclusively, it asserts that while media significantly influences mortgage choices, there remains an urgent need for enhanced financial education and critical engagement among consumers. "The implications for practitioners and policymakers are discussed, alongside proposed directions for future research endeavors" (Gathergood & Weber, 2014).

Housebuilding, land, and structural power: the case of mortgage market support schemes in England

Abstract Housing is a critical part of every state’s infrastructure. However, in most advanced economies the state no longer builds very much of it, leaving it instead to private housebuilders. Because of their control over the supply of land, and the barriers to entry into the housebuilding industry, private housebuilders have potentially major structural power over the state. At the same time, private housebuilders are also tied to their land, and face other barriers to exit, thus limiting their ability to relocate capital elsewhere. Drawing on a range of secondary data sources, including earnings calls transcripts, annual reports and government policy documents, this paper demonstrates how the three largest volume housebuilders in England leveraged their structural power to shape the mortgage market support schemes that were introduced in the aftermath of the Global Financial Crisis. These schemes have since underpinned their exceptional levels of profitability. We conclude, though, that far from being an absolute resource, this structural power was only enabled by the prevailing neoliberal, home-owning Anglo-liberal ‘growth model’ in which these housebuilders were embedded.

The Potential Impact of Blockchain on Real Estate: Insights from Conventional Mortgage Market Data

The Potential Impact of Blockchain on Real Estate: Insights from Conventional Mortgage Market Data

Соціальні та економічні ефекти розвитку ринку іпотечного кредитування в умовах дії правового режиму воєнного стану

The article reveals the peculiarities of the development of the mortgage lending market in Ukraine and its impact on the socio-economic development of society. Housing mortgage lending allows the optimal combination of the interests of various parties as one of the most reliable ways of attracting private investment through the capitalization of residential real estate, – construction companies, financial and credit institutions, citizens, and the state. The mortgage lending system changes the needs of different social strata of the population, affecting the behavior strategy and adaptation to market conditions. Providing good living conditions contributes to improving the nation’s health, increasing life expectancy, and increasing the working capacity of the population, which are essential components of the country’s social capital. An assessment of the possibilities of stimulating this influence in the conditions of war and post-war recovery was carried out, and the necessary tools for strengthening the social orientation of mortgages were determined. The processes of implementing the state program «eOselia» as a vital tool for restoring mortgage lending to provide affordable housing for the population have been analyzed. The conclusions regarding the possibilities of developing mortgage lending in modern challenges and the need to implement strategic measures to stabilize and expand the housing market in Ukraine are substantiated. The development of the real estate market and mortgage lending is quite tricky due to the instability of the economic situation in the country, the war, and the population’s growing demand for the improvement of housing conditions. Therefore, the proper development of the mortgage lending market will contribute not only to the economy but also to the social development of the state. Thanks to reforms, state support programs, and technological innovations, Ukraine can create a more accessible and stable mortgage market, which will contribute to the improvement of the living conditions of citizens and general economic development. Keywords: mortgage, mortgage lending, mortgage lending market, state lending program.

Credit Supply, Prices, and Non-price Mechanisms in the Mortgage Market

Credit Supply, Prices, and Non-price Mechanisms in the Mortgage Market

Cash is King? Understanding Financing Risk in Housing Markets

Abstract In Los Angeles, all-cash home purchases quintupled during the last decade. Compared with an else-equal mortgage offer, a cash offer is associated with 29% shorter time-to-close and a 2-3.9% price discount, indicating a substantial amount of financing risk—the risk to a seller that a transaction may not close on time and may fail to occur again because a mortgage contingency fails. The estimated cash discount aligns well with a canonical model calibrated to the sample market. Our findings reveal that closing risk alone is insufficient to explain the cash discount. Rather, it turns on the possibility that a property back on the market may fail to sell, requiring a substantial risk compensation. The estimated cash discount is smaller during booms and in larger markets, highlighting the inseparability of financial frictions in the mortgage market and search frictions in the housing market.

Cross-Country Analysis of Inflation Experiences and Homeownership: A Qualitative Review

This qualitative literature review examines the relationship between inflation experiences and homeownership across countries. Drawing on a synthesis of existing research, the review explores how historical inflation contexts influence individuals' decisions to invest in real estate. Findings indicate that periods of high inflation often motivate individuals to view homeownership as a hedge against inflationary pressures, particularly in economies with volatile economic conditions. Institutional factors, such as mortgage market structures and housing policies, play a crucial role in shaping this relationship, influencing overall homeownership rates across different regions. Immigrant populations bring unique perspectives, as their housing decisions in host countries are influenced by inflation experiences in their countries of origin. The review highlights methodological diversity and calls for more longitudinal and cross-country studies to enhance the robustness and generalizability of findings. Addressing these dynamics can provide insights into effective policy interventions aimed at promoting sustainable housing markets globally.

Summarising directions for using fintech products in the field of financial sector development, in particular mortgage financing

Mortgage lending has become the most important part of the financial market. The most common use of a mortgage is the purchase of an apartment or a private house on credit by an individual. Given the importance of the chosen topic, the goal of the research is defined as follows: to identify promising directions for the development of mortgage financing using fintech products. The list of fintech products that can be used in the field of mortgage financing to improve the system of managing mortgage loan processes using methods of generalisation and systematisation has been elaborated. It has been discovered that the mortgage lending process provides for the analysis of a borrower’s risks as well as more complex procedures for determining optimal interest rates for mortgage lending. When the analysis of discount rates is taken as a basis, it is necessary to analyse market volatility. These results have been achieved using methods of analysis and systematisation. Fintech tools are increasingly being used to facilitate the work on data analysis in the development of the mortgage lending system, as they enrich the toolkit for ensuring the security of the mortgage financing process both at the level of financial institutions and state regulation. The peculiarities of using fintech tools have been identified. Main trends and risks of the development of modern mortgage financing using the concretisation method have also been discovered. The possibilities of using fintech tools in the field of mortgage financing have been determined; in particular, an approach to creating a technical task of using fintech tools for further development of mortgage financing has been created. The author’s approach will be of practical significance for both financial institutions providing mortgage financing and mortgage market regulators to minimise risks in the system of providing mortgage loans

A DSGE Model of the Russian Residential Real Estate Market

The paper develops a dynamic stochastic general equilibrium (DSGE) model of the Russian economy based on an endogenous housing sector and three categories of homeowners – patient, impatient and non-Ricardian. The DSGE model is applied from the first quarter of 2010 to the fourth quarter of 2019 using a Bayesian method for minimizing the discrepancy between theoretical and empirical impulse responses to a shock due to modified terms of trade. The model is then employed to provide a quantitative assessment of how macro variables respond to shocks generated by the housing market, interest rates, mortgage subsidies, financial liberalization, and altered terms of trade. At the same time, the impact of shocks on a number of economic indicators is largely determined by the functional form of household utility, as demonstrated by the robustness test. The results obtained based on the model also do not demonstrate a strong inertial effect in the economy due to the revival of the residential real estate construction sector, and they contradict a number of studies and expert estimates based primarily on the input-output model. One reason for this discrepancy may be the analysis, which is based on a horizontal supply curve, resulting in an overestimation of the impact of the construction sector on the economy. This DSGE model can serve as a starting point for scenario-based projections of the dynamics of the residential real estate market and the associated mortgage market, for testing the impact of various policy measures on the housing sector, and for assessing their effects on various categories of households.

Mortgage Financing and Affordable Housing Nexus: Evidence from Developing Countries

The study investigated the relationship between mortgage financing and affordable housing in Kumasi, Ghana. It explores how mortgage financing influences affordable housing supply. It identified 23 banking institutions of which 11 of them are into mortgage financing. Adopting the exploratory sequential mixed method research design, the study selected banks households and, realtors as respondents using both purposive and accidental sampling techniques. The study found that, in Kumasi and Ghana, housing is affordable on paper but very expensive on the ground as none of the houses supplied on affordable housing projects are affordable to middle- and low-income earners. The study acknowledged that the high level of LtVR has made mortgage financing very expensive to ordinary Ghanaians and such calls for government-insured mortgages to make housing supply less expensive. It found that the ANOVA results from a regression analysis with a multiple R of 0.240 and R square of 0.058 shows that only 5.8% of the total mortgage lending rates are influenced by the interest rate pegged by the Bank of Ghana (BoG) and hence there is a very weak relationship between interest rate and mortgage lending rate in Ghana. The study concludes based on the findings that in Kumasi and Ghana, housing units that are supplied using mortgage financing by the government realtors are more expensive than those built by private estate developers with or without mortgages. Hence a complete reform of the mortgage policy to include government-insured mortgages to make the secondary mortgage market attractive was recommended.

MORTGAGE LENDING AS A FACTOR OF SOCIAL AND ECONOMIC DEVELOPMENT OF THE COUNTRY

A mortgage and a mortgage loan are components of the mortgagesystem, the evolution of which dates back several millennia. During this period, there was a transformation of views on the mortgage -from a pledge -a plot of land to an understanding of the mortgage as a financial instrument in the mechanism of socio-economic development of the country.In the lands of Ukraine, the mortgage system arises and develops simultaneously with the development of banking. At the end of the 19th and the beginning of the 20th centuries. a network of mortgage banks was formed on the territory of Ukraine, and mortgages acquired credit functions and turned into a supply channel for investments in agriculture. In the modern period, a mortgage loan is an effective tool in the mechanism of development of the market economy. Mortgages not only stimulate the construction of new housing and provide housing for the country's population on a market basis, but also launch the mechanism for the development of the securities market, the banking and insurance market, and allow the creation of additional jobs in the construction industry and in the production of consumer durables. The action of the mortgage has a multiplicative effect and allows to achieve a significant socio-economic effect, is a factor in the birth of the middle class in societyand a prerequisite for the formation of social well-being. A key role in the development of mortgage lending in the modern period is played by the state program "eOselia", which began working in Ukraine in October 2022 and allowed to obtain a mortgage loan from 3% to 7% per annum. Since the beginning of the "eOselia" program in Ukraine, mortgage loans in the amount of more than 13 billion hryvnias have been issued, and more than 8,500 families have benefited from this program.Adapting the work of the mortgage system to the conditions of war, the aggravation of security risks and demographic changes, requires the participants of the mortgage market to improve the business models developed in pre-war times, to look for new forms for the restoration of mortgage lending, to conduct constant monitoring of social, political and economic factors. The adaptation mechanism on the part of the state provides for the strengthening of legal control over all elements of mortgage lending and maximum support through the transparency of pricing for mortgage loans.

STIMULATING THE DEVELOPMENT OF RESIDENTIAL DEVELOPMENT THROUGH MORTGAGE LENDING

The article is devoted to stimulating the development of housing construction through mortgage lending. The purpose of the article is to determine the role of mortgage lending in the development of the housing sector, in particular through its impact on supply and demand in the real estate market and pricing in this sector. In the course of the research, data analysis, correlation analysis, and methods of forecasting economic trends were used. Graphical methods were also used to provide a clear understanding of how changes in the mortgage market affect the development of the real estate sector. The results of the study show that mortgage lending is a key element in stimulating the development of the housing sector, as it not only directly facilitates access to finance for potential property buyers, but also indirectly affects the pricing and investment attractiveness of the housing sector. The paper shows that fluctuations in mortgage rates have a significant impact on the dynamics of supply and demand in the residential real estate market, as well as on price trends. In particular, rising mortgage rates tend to reduce demand for housing, as households expect better investment opportunities. There is also a strong correlation between mortgage rate increases and slower price growth. The expansion of the mortgage lending market and, consequently, a reduction in mortgage rates boosts supply in the real estate market. Nevertheless, it is found that such changes can have complex and ambiguous consequences, including the risks of market overheating and the formation of price "bubbles" that threaten the stability of the sector in the long run. In addition, the study found that mortgage lending facilitates the implementation of new construction projects and the expansion of the housing stock, which is an important factor in stimulating economic growth. At the same time, the analysis showed that the impact of mortgage rates on the real estate market depends on a wide range of factors, including the economic situation, central bank policy, consumer confidence and other macroeconomic indicators. The practical significance of the publication is to provide recommendations for the development of a balanced policy in the field of mortgage lending aimed at supporting the stable development of the housing sector and preventing potential destabilising factors in the real estate market.

The Time‐Varying Price of Financial Intermediation in the Mortgage Market

ABSTRACTWe introduce a new measure of the price charged by financial intermediaries for connecting mortgage borrowers with capital market investors. Based on administrative lender pricing data, we document that the price of intermediation reacts strongly to variation in demand, reflecting capacity constraints of mortgage originators. This positive comovement of price with quantity reduced the pass‐through of quantitative easing. We also find a notable upward trend in this price between 2008 and 2014, likely due to increased legal and regulatory burden in the mortgage market. The trend led to an implicit cost to borrowers of nearly $100 billion over this period.

Racial Disparities in the US Mortgage Market

We study racial disparities in the US mortgage market. Using new data from Hurtado and Sakong (2024), we present three findings. First, we document access disparities between minority and otherwise-identical White borrowers even within the same bank and with the same loan officer. In contrast, cost disparities are nearly zero. Second, the use of automated underwriting algorithms is associated with smaller access disparities but slightly larger cost disparities. Third, individual factors such as loan officers' race and whether borrowers' race is observed at application do not seem to matter much.

Demand for financial advice: Evidence from a randomized choice experiment

How does the salience and structure of costs for financial advice influence consumer demand? This study conducts a randomized choice experiment exploring possible consequences of introducing a commission ban in the retail mortgage market. A sample of more than 2100 participants of the Dutch Household Survey panel reveals that in a fee-based regime, in which the costs of advice are salient and must be paid upfront, demand for advice decreases by 25 % compared with a situation in which the same costs are embedded in mortgage payments. We do not find evidence that such demand effects for financial advice varies across less versus more sophisticated customers. At the same time, we do find that customers with a stronger focus on the present express less willingness to pay for advice upfront.

Mortgage Lending in the Russian Federation

Relevance. Today in Russia, more than half of the population feels the need to improve their housing. However, the opportunity to purchase housing without the help of borrowed funds is available only to a small group of citizens. Mortgage lending is the only way that allows you to purchase your own home and make it affordable for the population in Russia. The purpose of the study is to study the current state of mortgage lending in Russia, in particular, changes in average terms, interest rates on mortgages and leaders in the mortgage lending market.Objectives: to identify the role of mortgage lending in the Russian Federation; reflect the features of mortgage lending in Russia; analyze the mortgage lending market and its participants.Methodology. During the research process, general scientific methods were used: scientific abstraction, analysis and synthesis, generalization of scientific practice, deduction, induction.Results. The study shows that mortgage lending in Russia is actively developing. The availability of mortgages depends on the relationship between the level of income of the population and housing prices. The Russian market is now experiencing high real estate prices and, accordingly, high rates for this type of lending. All these factors hinder the development of the mortgage lending market, which is why the growth rate of mortgage lending has been declining in recent years.Conclusions. The increase in the volume of issued loans largely depends on the weighted average interest rate on mortgage loans. At the beginning of 2023, the weighted average rate on mortgage loans in Russia was 6.65% per annum, which was lower than at the beginning of the previous five years. In 2020, new types of preferential categories were introduced, which had a positive impact on the mortgage market as a whole. From an analysis of data on the issuance of mortgage loans in Russia over the past four years, it is clear that Sberbank and VTB are the leaders in mortgage lending in Russia, controlling most of the market.

The role of FinTech lenders in mortgage market: Evidence from corporate relocations

This study investigates how FinTech lenders respond to the surge in mortgage demand caused by corporate headquarter relocations. We find that FinTech lenders tend to increase mortgage supply and loosen underwriting criteria as compared to non-FinTech lenders. The competitive advantage obtained from mortgage securitization enables FinTech lenders to capture growth opportunities.

The reverse mortgage market in New Zealand: key drivers of loan determination

ABSTRACT This paper examines the drivers of loan principals in the reverse mortgage and equity release market in New Zealand using a hedonic price model (HPM) approach. Our analysis using reverse mortgages data between 2004–2021, sourced from one major reverse mortgage bank, provides four key findings. First, the term of payment for repaid reverse mortgages is positively associated with loan principals, implying that longer repayment terms allow applicants who were able to repay mortgages to borrow more. Second, there is partial evidence to suggest the presence of a positive linear impact of the value of the current property on its loan principal, in line with previous house price modelling studies. Third, older applicants (age 75+) borrow less than younger applicants, which may be due to their repaying ability. Fourth, we confirm a positive effect of interest rates on reverse mortgage amounts but reject the positive association between wider loan-to-value policy restrictions and equity release lending amounts. The results broadly highlight that the house price is more relevant than any individual characteristic of a property in determining loan principals, and that all drivers are relevant in the early stage of the development of the reverse mortgages market in New Zealand.

Exploring real estate valuation practices in an informal market

This study investigates the intricate realm of real estate valuation in the Palestinian neighborhoods of East Jerusalem. Drawing on 27 interviews with real estate appraisers and an analysis of betterment tax valuations, arbitration reports, and court minutes spanning the years 1991–2023, we unpack the distinct valuation practices in this informal urban setting. We discuss the unique challenges involved in valuations in informal real estate markets and how appraisers address them, suggesting that appraisers in East Jerusalem grapple with structural, top-down challenges—arising from inconsistent Israeli planning regulations, geopolitical instability, and an underdeveloped mortgage market—and bottom-up obstacles stemming from limited transaction reporting by local Palestinian residents. To navigate these challenges, appraisers employ creative solutions, such as a 'copy & paste' strategy, referencing older arbitration verdicts, and creating complementary databases. They also rely on local knowledge and their familiarity with the field. Our research sheds light on the innovative methods appraisers utilize to assess land value in the complex and dynamic environment of East Jerusalem, and in informal areas more broadly.

The Impact of Mortgage Rates on Mortgage Refinancing

Mortgages loans are vital for the acquisition of housing property and mortgage lending rates play an important role in mortgage market trends, borrowers, and lenders’ decisions. Objective: the aim of this paper is to evaluate the combined effect of current and previous mortgage rates on mortgage refinancing. Prior work: the paper inclines on the ontology of a single reality of the interaction between mortgage rates and mortgage refinancing with attendant epistemology that their interaction is measurable. Method: the paper adopts the positivist paradigm and a quantitative technique. It used data on the U.S. Mortgage Bankers Association (MBA) retrieved from the economic and financial database of Fusion Media. Data were analysed using the OLS technique. Novel Findings show that current-actual and previous mortgage rates have a significant positive effect on mortgage refinancing at p=0.05 and p=0.04 respectively. Significance: the findings have implication for mortgage lending and refinancing decisions for mortgage bankers (lenders), mortgage borrowers and policy makers. It also provides current academic study material for university business schools and for future researchers to apply the model used in this research for related expanded research. Value: The paper contributes a new model with two genres of mortgage rate (current mortgage rate and previous mortgage rate) and how these two types of mortgage rates influence mortgage refinancing.