Local economic risk factors and the primary and secondary mortgage markets

Brent W. Ambrose, Anthony Pennington-Cross

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


This paper presents a cross-sectional analysis of the spatial distribution of loans in the primary and secondary mortgage markets. Aggregating loan originations to the MSA level, we examine the proportion of the market served by FHA and conventional lenders. We model the geographic differences in market shares as a function of supply, demand, and economic risk factors. Results indicate that FHA market shares are higher in cities with higher economic risk characteristics. To examine the role of GSE activity, we model the spatial distribution of the disposition of conventional loans. Again, we focus on the impact of local economic risk factors on the proportion of loans purchased by the GSEs, purchased by other financial institutions, or retained by the originating lender. Our results indicate that GSEs purchase rates are fairly insensitive to local economic conditions indicating that they serve the primary market with little spatial variation.

Original languageEnglish (US)
Pages (from-to)683-701
Number of pages19
JournalRegional Science and Urban Economics
Issue number6
StatePublished - 2000

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Urban Studies


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