earticle

영어

This paper investigates an empirical relationship between house price dynamics and mortgage choices between adjustable- and fixed-rate mortgages. As increasing housing costs generally reduce housing demand, house prices are likely to decrease as real housing cost increases This paper shows that as borrowers prefer to choose more adjustable rate mortgages rather than fixed rate mortgages in the U.S. metropolitan areas, house prices are more likely to decrease further with a negative shock of housing costs. This implies that house prices are much more volatile in markets in which more borrowers prefer to choose adjustable rate mortgages like a Korean market.