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Teaser Rates in Conventional Adjustable-Rate Mortgage (ARM) Markets
Journal article   Peer reviewed

Teaser Rates in Conventional Adjustable-Rate Mortgage (ARM) Markets

Joel F. Houston, J. Sa-Aadu and James D. Shilling
The journal of real estate finance and economics, Vol.4(1), pp.19-31
03/01/1991
DOI: 10.1007/BF00171358

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Abstract

This article examines the pricing of teaser rates on adjustable-rate mortgages (ARMs). The theory indicates that lenders may offset teaser rates on ARMs through an increase in upfront fees or points, through looser life of loan rate caps, or through higher contract rates after the teaser has expired. Cross-sectional regression results fail to reject the null hypothesis that teaser ARMs are correctly priced.
Business & Economics Business, Finance Economics Social Sciences Urban Studies

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