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Beyond origination charges: The pass-through of GSE upfront fee adjustments in 2022

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  • Wu, Di
  • Deng, Nanxin

Abstract

In 2022, a policy increased mortgage guarantee fees for government-sponsored enterprises (GSE) purchases in high-cost areas. Given that the adjustment is specific to selected loan types, we employ a difference-in-differences approach to evaluate the shifts in origination charges for affected mortgages relative to unaffected ones. We find that the increases in origination charges only encapsulate a minor fraction of the escalated costs faced by lenders. Instead, lenders appear to adapt by elevating the interest rates. This research illuminates an unforeseen response from lenders and underscores the necessity for nuanced strategies in housing finance policy formulation.

Suggested Citation

  • Wu, Di & Deng, Nanxin, 2024. "Beyond origination charges: The pass-through of GSE upfront fee adjustments in 2022," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011613
    DOI: 10.1016/j.frl.2023.104789
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    References listed on IDEAS

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    1. Jonas Hjort & Mikkel Sølvsten & Miriam Wüst, 2017. "Universal Investment in Infants and Long-Run Health: Evidence from Denmark's 1937 Home Visiting Program," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 78-104, October.
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    4. Anthony A. DeFusco & Andrew Paciorek, 2017. "The Interest Rate Elasticity of Mortgage Demand: Evidence from Bunching at the Conforming Loan Limit," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 210-240, February.
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    6. Damian Clarke & Kathya Tapia-Schythe, 2021. "Implementing the panel event study," Stata Journal, StataCorp LP, vol. 21(4), pages 853-884, December.
    7. Lynn M. Fisher & Mike Fratantoni & Stephen D. Oliner & Tobias J. Peter, 2021. "Jumbo rates below conforming rates: When did this happen and why?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S2), pages 461-489, September.
    8. Natalie Newton & James Vickery, 2022. "The Pandemic Mortgage Boom," Economic Insights, Federal Reserve Bank of Philadelphia, vol. 7(3), pages 18-24, November.
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