A note on hybrid mortgages

Brent William Ambrose, Michael LaCour-Little, Zsuzsa R. Huszar

Research output: Contribution to journalReview article

31 Citations (Scopus)

Abstract

We extend previous research on traditional one-year adjustable-rate mortgages (ARMs) by analyzing the performance of 3/27 hybrid instruments. Under this contract innovation, which first appeared in the mid-1990s, note rates are fixed for three years after which they convert to a traditional one-year adjustment schedule with periodic and lifetime caps. We find high rates of prepayment, particularly at time of initial rate adjustment, and relatively high rates of default, as would be consistent with the payment shock that often affects adjustable-rate loans.

Original languageEnglish (US)
Pages (from-to)765-782
Number of pages18
JournalReal Estate Economics
Volume33
Issue number4
DOIs
StatePublished - Dec 1 2005

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Mortgages
Adjustable rate mortgages
Payment
Prepayment
Schedule
Loan rates
Innovation

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Ambrose, Brent William ; LaCour-Little, Michael ; Huszar, Zsuzsa R. / A note on hybrid mortgages. In: Real Estate Economics. 2005 ; Vol. 33, No. 4. pp. 765-782.
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Ambrose, BW, LaCour-Little, M & Huszar, ZR 2005, 'A note on hybrid mortgages', Real Estate Economics, vol. 33, no. 4, pp. 765-782. https://doi.org/10.1111/j.1540-6229.2005.00138.x

A note on hybrid mortgages. / Ambrose, Brent William; LaCour-Little, Michael; Huszar, Zsuzsa R.

In: Real Estate Economics, Vol. 33, No. 4, 01.12.2005, p. 765-782.

Research output: Contribution to journalReview article

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