The Effects of Securitization on Consumer Mortgage Costs

43 Pages Posted: 1 Jun 2000

Multiple version iconThere are 2 versions of this paper

Date Written: January 2000


We examine the effects of securitization on two dimensions of consumer mortgage costs: coupon rates and loan origination fees. We find no evidence that securitization reduces the coupon rates on fixed or adjustable-rate mortgages. Instead, securitization appears to lower mortgage loan origination fees, resulting in substantial savings for consumers. Securitization activity includes passthrough creation and collateralized mortgage obligation (CMO) creation. We test for differences between the effects of passthrough and CMO creation on primary mortgage costs. Surprisingly, these activities appear to have indistinguishable effects on loan rates and origination fees, suggesting a large derivatives market for mortgage loans isn't creating value for consumers.

Keywords: Securitization, consumer mortgage costs, CMOs, derivatives

JEL Classification: G15, G13, F31

Suggested Citation

Todd, Steven K., The Effects of Securitization on Consumer Mortgage Costs (January 2000). Available at SSRN: or

Steven K. Todd (Contact Author)

Loyola University of Chicago ( email )

820 North Michigan Avenue
Chicago, IL 60611
United States
(312) 915-7218 (Phone)
(312) 915-8508 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics