Major Developments in Residential Mortgage and Housing Markets Since the Hunt Commission

A number of important changes have been made to the mortgage finance system since the Hunt Commission filed its report, and the economic environment has been altered substantially. This paper examines shifts in the relative importance of public and private institutions in the residential mortgage markets during the past decade, within the context of Hunt Commission recommendations. Changes in the cyclical sensitivity of mortgage and housing activity, and the implications of rapid inflation for the growth of these markets, also are considered. Copyright American Real Estate and Urban Economics Association.

Mortgage Pass-Through Securities: Progress and Prospects

This paper discusses the Housing Commission's perspective and recommendations on mortgage pass-through securities markets, reviews federal policy toward such securities in the wake of the Housing Commission "Report", and considers prospects for mortgage securities in the housing finance system of the future. Concerning the outlook, it is concluded that massive "securitization" of housing finance may not be inevitable-contrary to the developing conventional wisdom on this topic-partly because the underlying need for secondary market transactions may not be as strong as commonly expected. Furthermore, the relative importance of pass-through securities as secondary market vehicles may erode if federally related programs are phased down in line with Housing Commission recommendations, even if policies currently being developed within the Administration to improve the functioning of fully private securities markets are implemented. Copyright American Real Estate and Urban Economics Association.

Changing patterns of housing finance

Housing - Prices ; Housing - Finance

Recent development in mortgage and housing markets

Mortgages ; Housing - Finance

Household borrowing in the recovery

Households - Economic aspects ; Housing - Finance ; Loans

Managing Mortgage Interest-Rate Risks in Forward, Futures, and Options Markets

This article reviews the Housing Commission's perspective and recommendations on management of interest-rate risks in housing finance, and considers the relative advantages of various techniques by which institutions on the supply side of mortgage markets can absorb or shift such risks. It is argued that exchange-based options can provide a more reliable way than cash forward contracting for originators or purchasers of mortgages to manage commitment-period risk, but that commitment fees charged household borrowers should not fully correspond to premiums for put options "traded" on the exchanges. It also is argued that exchange-based futures can provide a more effective and economical way than asset-liability maturity matching in cash markets for thrift institutions to manage portfolio interest-rate risks; in particular, futures trading can permit these institution to meet the maturity preferences of liquidity-conscious creditors and risk-averse borrowers, to reduce the risk associated with unexpected shifts of the yield curve, and to maintain a higher degree of asset quality. The capacity of futures markets to handle large-scale hedging by mortgage market participants will depend upon heavy participation by highly leveraged speculators who are willing to take long positions without the receipt of substantial risk premiums from hedgers. Copyright American Real Estate and Urban Economics Association.

Price Behavior and Capital Gains on Residential Real Estate: The Case of Sweden

During most of the postwar period the increase of the prices of single-family homes in Sweden have exceeded the general inflation, while for several years the opposite is true of apartment houses. We discuss the reasons and present estimates of capital gains attached to this price behavior. It turns out that apartment houses have often yielded nominal but no real capital gains. Single-family homes have yielded real "accrued" capital gains amounting to approximately 3% of GNP during the period 1963-1976. We also present a rough indirect method of estimating "realized" capital gains, first disregarding, and then including the effects of loans. Copyright American Real Estate and Urban Economics Association.