Mortgage Revenue Bonds and Local Housing Markets
- 38 Downloads
Because of the low interest cost of mortgage revenue bonds (MRBs), state and local housing programs based on MRB issuance have been particularly popular during periods when nominal market interest rates have been at their cyclical peak. During these times of high interest rates, mortgage and housing activity have historically slowed due, in part, to the problems facing savings institutions (the traditional source of mortgage funds) and due to the nature of the demand function for mortgage credit. Before the secondary mortgage market expanded, when interest rates rose, traditional mortgage lenders faced constraints on the amount of funds available for lending in the residential market. Additionally, the demand for mortgage funds has been interest elastic as potential house buyers have postponed their purchases during periods of high interest rates.
KeywordsInterest Rate Demand Curve Supply Curve High Interest Rate Transaction Price
Unable to display preview. Download preview PDF.