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Adjustable-Rate and Fixed-Rate Mortgage Choice: A Logit Analysis

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Abstract

Logit analysis is used to determine if financial variables are significant in determining borrower selection between fixed-rate and adjustable-rate mortgages. The results support the hypothesis that mortgage choice is a function of the consumer price index, Treasury bill rates, and differences in the initial interest rates offered by the competing mortgages.

Suggested Citation

  • Michael Tucker, 1989. "Adjustable-Rate and Fixed-Rate Mortgage Choice: A Logit Analysis," Journal of Real Estate Research, American Real Estate Society, vol. 4(2), pages 81-91.
    • Handle: RePEc:jre:issued:v:4:n:2:1989:p:81-91
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    References listed on IDEAS

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    1. Dhillon, Upinder S & Shilling, James D & Sirmans, C F, 1987. "Choosing between Fixed and Adjustable Rate Mortgages: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(2), pages 260-267, May.
    2. Dietrich, J. Kimball & Sorensen, Eric, 1984. "An application of logit analysis to prediction of merger targets," Journal of Business Research, Elsevier, vol. 12(3), pages 393-402, September.
    3. Statman, Meir, 1982. "Fixed Rate or Index-Linked Mortgages from the Borrower's Point of View: A Note," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 17(3), pages 451-457, September.
    4. Al Field & Henry J. Cassidy, 1977. "Simulation Analysis of Alternative Mortgage Instruments," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 5(4), pages 411-433, December.
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    Cited by:

    1. Templeton, William K. & Main, Robert S. & Orris, J. B., 1996. "A simulation approach to the choice between fixed and adjustable rate mortgages," Financial Services Review, Elsevier, vol. 5(2), pages 101-117.
    2. Levitin, Adam & Wachter, Susan, 2012. "Explaining the Housing Bubble," MPRA Paper 41920, University Library of Munich, Germany.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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