| Article ID: | iaor201522723 |
| Volume: | 6 |
| Issue: | 2 |
| Start Page Number: | 153 |
| End Page Number: | 162 |
| Publication Date: | Jun 1983 |
| Journal: | Journal of Financial Research |
| Authors: | Harris John M |
| Keywords: | economics, simulation |
Personal income growth since 1950 has been similar to increases in housing prices. In recent years, however, increases in interest rates due to inflation have prevented many individuals from purchasing a home. In this paper, a framework of analysis based on variable coefficient difference equations is presented and used to evaluate a number of alternative mortgage instruments. As an extension of this analysis, a superior mortgage is proposed. Simulations are presented that quantify the advantages of this new mortgage.