TY  - JOUR
AU  - Hendershott,Patric H.
TI  - An Altered U.S. Housing Finance System: Implications for Housing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3770
PY  - 1991
Y2  - July 1991
UR  - http://www.nber.org/papers/w3770
L1  - http://www.nber.org/papers/w3770.pdf
N1  - Author contact info:
Patric H. Hendershott
Fisher Hall
Ohio State University
2100 Neil Avenue
Columbus, OH 43210
Tel: 218/963-1393
Fax: 218/963-9484
E-Mail: hendershott.2@osu.edu
M1  - published as Patric H. Hendershott. "Housing Finance in the United States," in Yukio Noguchi and James Poterba, "Housing Markets in the U.S. and Japan" University of Chicago Press (1994)

M2  - featured in NBER digest on 1991-10-01
AB  - During the 1960s and 1970s, the U.S. government closely regulated the single-family housing finance system. The regulation manifested itself in a highly specialized system with four notable characteristics: portfolio restrictions against investments in corporate assets, tax inducements to invest in residential mortgages, prohibitions against investing in ARMS, and deposit rates ceilings. All were removed in the 1980s, and, not surprisingly, the housing finance system changed markedly. Between early 1982 and 1989, two-fifths of all new loans had adjustable, not fixed, rates, and savings and loans reduced their holdings of FRMs (both whole loans and mortgage pass-throughs) by 15 to 20 percent. Moreover, the fraction of conventional FRM originations that have been pooled into pass-throughs rose from less than one-twentieth before 1981 to over one-half after 1985. With the opportunity of borrowers to shift to lower coupon ARMs when rates rise and with the integration of the home mortgage market with capital markets generally, one would expect that the U.S. housing sector is now less sensitive to rising interest rates than it was in the 1960s and 1970s. Numerous studies support this expectation.
ER  -