The Effects of Securitization on Consumer Mortgage Costs
43 Pages Posted: 1 Jun 2000
There are 2 versions of this paper
The Effects of Securitization on Consumer Mortgage Costs
Date Written: January 2000
Abstract
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: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Paper statistics
Recommended Papers
-
The Effect of Conforming Loan Status on Mortgage Yield Spreads: A Loan Level Analysis
By Brent W. Ambrose, Michael Lacour-little, ...
-
The Effect of Housing Government-Sponsored Enterprises on Mortgage Rates
By S. Wayne Passmore, Shane M. Sherlund, ...
-
The Impact of the Agencies on Conventional Fixed-Rate Mortgage Yields
-
Fussing and Fuming Over Fannie and Freddie: How Much Smoke, How Much Fire?
By Lawrence J. White and W. Scott Frame
-
Fussing and Fuming Over Fannie and Freddie: How Much Smoke, How Much Fire?
By W. Scott Frame and Lawrence J. White
-
Fussing and Fuming Over Fannie and Freddie: How Much Smoke, How Much Fire?
By W. Scott Frame and Lawrence J. White
-
Gses, Mortgage Rates, and Secondary Market Activities
By Andreas Lehnert, S. Wayne Passmore, ...
-
The Gse Implicit Subsidy and the Value of Government Ambiguity
-
Gses, Mortgage Rates, and the Long-Run Effects of Mortgage Securitization
By S. Wayne Passmore, Roger Sparks, ...