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  • 2009
  • Working Paper

Systemic Risk and the Refinancing Ratchet Effect

By: Amir E. Khandani, Andrew W. Lo and Robert C. Merton
The confluence of three trends in the U.S. residential housing market—rising home prices, declining interest rates, and near-frictionless refinancing opportunities—led to vastly increased systemic risk in the financial system. Individually, each of these trends is... View Details
Keywords: Housing; Mortgages; Risk and Uncertainty; Value; Mathematical Methods; Real Estate Industry; United States
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  • 2009
  • Working Paper

Systemic Risk and the Refinancing Ratchet Effect

By: Amir E. Khandani, Andrew W. Lo and Robert C. Merton
The confluence of three trends in the U.S. residential housing market-rising home prices, declining interest rates, and near-frictionless refinancing opportunities-led to vastly increased systemic risk in the financial system. Individually, each of these trends is... View Details
Keywords: Equity; Mortgages; Interest Rates; Price; Housing; Risk and Uncertainty; United States
Related

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