Mortgage Prepayment Behavior in a Market with Arms Only
نویسنده
چکیده
A study on the prepayment behavior of Hong Kong mortgage loans is conducted. With all of the loans as adjustable-rate mortgages (ARMs), we nd that 1) Pre-payment speeds up and then slows down as the mortgage seasons; 2) Prepayment speeds up as the rate markup decreases; 3) Prepayment speeds up as the interest rate increases; 4) Prepayment speeds up when the prootability ratio of the banks (the prime-HIBOR spread) is higher; 5) Prepayment speeds up as the price of the property market falls; 6) Prepayment speed is faster for loans with a lower loan-to-value ratio; 7) Prepayment exhibits a seasonal pattern: people tend to prepay in the summer. We thank Charles Huang for providing the data and his many suggestions. We also thank Shirley Leung for her research assistance. Send correspondence to:
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