The prepayment-protection loan rides again
Article Abstract:
The prepayment-protection mortgage (PPM) has made a comeback after it was dissolved in the 1980s due to changes in the economic environment and market trends. PPM's popularity diminished in the 1980s due to the growing interest in secondary mortgage market during the period. However, decreasing interest rates in the 1990s has made investors return their attention on borrower prepayment behavior. PPM differs from other mortgage instruments as it provides basic fairness among borrowers. It provides the borrower lower interest for the entire loan life as well as allows the borrower to give up his right to prepay the loan without penalty in its early years.
Publication Name: Secondary Mortgage Markets
Subject: Economics
ISSN: 0740-4271
Year: 1997
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Market trends raise challenges
Article Abstract:
The interest rates in the mortgage market rose by 200-basis-points in 1994, reducing the volume in refinances and increasing the demand for adjustable-rate mortgages (ARM) and low down payment loans. However, originations fell in the 4th quarter of 1994 to their lowest levels since the 1991 recession. Market experts believe that a 0.5% growth in GDP will push mortgage debt to grow bigger. ARMs posted the largest increase in share of total originations from 24% to 59%, reflecting the strong competition in the mortgage market.
Publication Name: Secondary Mortgage Markets
Subject: Economics
ISSN: 0740-4271
Year: 1995
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Loans around the world
Article Abstract:
Housing finance varies by country and the instrument, terms of payment and risk management varies with it. Types of financing include fixed rates, government subsidized, dual-indexed, reviewable rate mortgage among others. House-price-to-income ratios also vary by country as well as the homeownership rates. Funding risks also vary with financiers choosing either single or multiple risk sharing.
Publication Name: Secondary Mortgage Markets
Subject: Economics
ISSN: 0740-4271
Year: 1997
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