Heterogeneour Homebuyers, Mortage Choice and the Use of Mortage Brokers.
Roche, Maurice and Duffy, David (2005) Heterogeneour Homebuyers, Mortage Choice and the Use of Mortage Brokers. .
Choosing a mortgage product in the face of labor income risk, interest rate risk and borrowing constraints is one of the most important decisions facing a household. This paper investigates the choice between a variety of fixed rate mortgages and adjustable rate mortgages. We find that households with a high loan-to-value ratio, risky income and high risk aversion are more likely to choose a fixed rate mortgage. Choosing a mortgage product relies market search and information. The paper finds that in general first-time homebuyers and those with a high loan-to-value ratio are more likely to use a mortgage broker.
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