An Empirical Analysis of Residential Mortgage Refinancing Decision-Making.

Swati Virmani, Austin Murphy

Research output: Contribution to journalArticle

Abstract

This research empirically investigates the relative optimality of several different methods of making refinancing decisions on residential mortgages. The results indicate that a simple rule of refinancing whenever the mortgage rate has dropped 1% was approximately as effective as application of an option pricing model in minimizing the cost of financing over the 1980–2007 interval.
LanguageEnglish
Pages129-138
Number of pages10
JournalJournal of Housing Research
Volume19
Issue number2
Publication statusPublished - 2010
Externally publishedYes

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Mortgages
Refinancing
Empirical analysis
Decision making
Option pricing model
Costs
Financing
Optimality
Mortgage rates
Simple rules

Cite this

Virmani, Swati ; Murphy, Austin. / An Empirical Analysis of Residential Mortgage Refinancing Decision-Making. In: Journal of Housing Research. 2010 ; Vol. 19, No. 2. pp. 129-138.
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An Empirical Analysis of Residential Mortgage Refinancing Decision-Making. / Virmani, Swati; Murphy, Austin.

In: Journal of Housing Research, Vol. 19, No. 2, 2010, p. 129-138.

Research output: Contribution to journalArticle

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AB - This research empirically investigates the relative optimality of several different methods of making refinancing decisions on residential mortgages. The results indicate that a simple rule of refinancing whenever the mortgage rate has dropped 1% was approximately as effective as application of an option pricing model in minimizing the cost of financing over the 1980–2007 interval.

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