Credit rationing in the U.S. mortgage market: Evidence from variation in FHA market shares

Brent W. Ambrose, Anthony Pennington-Cross, Anthony M. Yezer

Research output: Contribution to journalArticle

18 Citations (Scopus)

Abstract

This paper examines the nature of mortgage credit rationing across geographic markets and time. Particular attention is paid to the response of conventional mortgage supply to higher risk conditions associated with regional recessions. We develop a series of four indirect tests based on the spatial variation of the FHA share of mortgages, both endorsements and applications, as well as FHA and conventional rejection rates. Results of these four tests indicate that conventional mortgage underwriting criteria do not become more flexible and may even become more demanding when local economic conditions deteriorate. This result indicates the use of non-price credit rationing in the mortgage market and suggests a special role for FHA-insured mortgages as a mechanism for maintaining mortgage credit supply in declining housing markets.

Original languageEnglish (US)
Pages (from-to)272-294
Number of pages23
JournalJournal of Urban Economics
Volume51
Issue number2
DOIs
StatePublished - Jan 1 2002

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rationing
market share
credit
market
supply
evidence
housing market
economic conditions
recession
spatial variation
economics
Credit rationing
Market share
Mortgage market
Mortgages
test

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Urban Studies

Cite this

Ambrose, Brent W. ; Pennington-Cross, Anthony ; Yezer, Anthony M. / Credit rationing in the U.S. mortgage market : Evidence from variation in FHA market shares. In: Journal of Urban Economics. 2002 ; Vol. 51, No. 2. pp. 272-294.
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Credit rationing in the U.S. mortgage market : Evidence from variation in FHA market shares. / Ambrose, Brent W.; Pennington-Cross, Anthony; Yezer, Anthony M.

In: Journal of Urban Economics, Vol. 51, No. 2, 01.01.2002, p. 272-294.

Research output: Contribution to journalArticle

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