Mortgage Credit Availablility, Housing Starts and the Integration of Mortgage and Capital Markets: New Evidence Using Linear Feedback

This paper employs linear feedback measures to examine the relationship between housing starts and the availability of mortgage credit. Estimates are obtained using monthly data with samples ending with May 1978 and beginning with June 1978. The results indicate that mortgage credit availability contributed significantly to short-run cycles in houses starts in the earlier sample. Such feedback is considerably smaller, however, in the later sample. The results suggest the housing finance sector has become integrated with the overall capital market as the result of the deregulation of thrift deposit rates and the development of securitized mortgage market.

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	McGarvey, Mary G Associate Professor of Economics Expertise: Econometrics Applied Econometrics Public Policy Analysis Economics CBA 351 P.O. Box 880489 University of Nebraska-Lincoln Lincoln, NE 68588-0489, USA Phone: (402) 472-9415 Fax: (402) 472-9700 mmcgarvey1@unl.edu	McGarvey, Mary G	Economics