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Revisiting the Net Benefits of Freddie Mac and Fannie Mae

Exhibit 2 ARM Loans Are More Prevalent in the Jumbo Market

Exhibit 3 Fixed-Rate Mortgages at the Conforming Loan Limit as a Percentage of Fixed-Rate Mortgages At or Above the Limit

(Loans originated from January through October)

Year

Percentage At Limit

1997

12.3

1998

14.5

1999

29.0

2000

31.6

2001

38.0

2002

23.1

2003

24.9

2004

28.3

nonconforming loans. The clearest manifestation of this preference is the concentration of loan amounts exactly at the conforming limit.

Exhibit 3, based on MIRS data, shows concen- tration (around the loan limit) figures for 1997 through 2004. The calculations are based on data for the first 10 months of each year to avoid possible dilution in November and December, when lenders price “small jumbos” like conform- ing loans in anticipation of an increase in the conforming loan limit.47 Data show a higher level of concentration since 2000. Concentration in 1999 and later years ranges from 23 percent in 2002 to 38 percent in 2001.

47

See Flannery and Lockhart (2005) and McKenzie (2002).

The Freddie Mac and Fannie Mae Contributions to National Goals

n

18

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