ARM lenders compete on introductory rates

Article Abstract:

The Nov. 1996 survey conducted by Freddie Mac reveals that pricing differences among competing adjustable-rate mortgages (ARMs) are reflected principally in the introductory, discounted interest rates of these loans. The survey detected only a slight difference in the average number of points charged or in the average margin of the loans. ARMs differed by more than thrice the spread among rates offered for fixed mortgages. ARM borrowers are bound to benefit from comparison shopping among lenders.

Prices and rates, Mortgage bonds

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ARMs lose popularity as interest rates drop in 1995

Article Abstract:

Adjustable-rate mortgages (ARMs) decreased from 60% share in January 1995 to about 20% in December 1995 due to the decline in interest rates for fixed-rate mortgages and a reduction in teaser-rate pricing for ARMs. The average commitment rate for fixed-rate mortgages fell over two percentage points in 1995. Even if ARMs were less popular to homebuyers, lenders still expanded their line of ARM products because interest rates for ARMs are tied to the lender's cost of funds.

Commercial Banks, Mortgage and Nonmortgage Loan Brokers, Consumer Mortgage Loans, Statistics, Market share

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Measuring the market: easier said than done

Article Abstract:

The completeness of data reported under the Home Mortgage Disclosure Act (HMDA) should be examined because not all single-family loans are reported. Coverage rates indicate that about 30% of mortgage originations were not reported. The extension of HMDA's reporting requirements in 1993 did not include small lenders making fewer than 100 loans a year. With close study, the underreporting comes from large undercounts of relatively few firms.

Analysis, Economic research

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