Consumer-Lending-and-Bor課件

1、Money and Capital Markets23C h a p t e rEighth EditionFinancial Institutions and Instruments in a Global MarketplacePeter S. RoseMcGraw Hill / IrwinSlides by Yee-Tien (Ted) FuConsumer Lending and Borrowing 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 2 Learning

2、 Objectives w To see the vital role played by consumers in supplying loanable funds through savings to the money and capital markets.w To learn about the important role consumers play as major borrowers of funds.w To explore the characteristics of consumer lending institutions.w To understand the ri

3、ghts that consumers have with respect to financial services. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 3Consumers as Lenders of Fundsw Consumers as a group are among the most important lenders of funds in the economy.w Loanable funds are supplied by consumer

4、s individuals and families (households) when they purchase financial assets from other units in the economy.Financial Assets Purchased by ConsumersSource: Board of Governors of the Federal Reserve System23 - 4 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 5The G

5、rowing Menu of Savings Instruments Available to Consumers Todayw One of the most important trends affecting consumer savings and lending today is the explosion of new financial instruments.w Many of these new instruments offer the consumer greater financial flexibility, as well as the potential for

6、higher rates of return. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 6The Growing Menu of Savings Instruments Available to Consumers Todayw Examples:NOW accounts / share draftsautomatic transfer services (ATS)share accounts at money market mutual fundsconsumer

7、cash management servicesuniversal life insuranceindividual and Keogh Plan retirement accountsRoth and Education IRAsmoney market and market-index CDsvariable-rate annuities and insurance plans 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 7Consumers as Borrowers

8、 of FundsSource: Board of Governors of the Federal Reserve System 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 8Is Consumer Borrowing Excessive?Households and Nonprofit OrganizationsAmounts outstanding at year-end ($ billions)19701980199020002001Total financial

9、 2,572.36,643.014,853.933,679.932,097.5assetsTotal debts478.71,455.53,746.87,507.18,083.1(liabilities)Difference:2,093.65,187.511,107.126,172.824,014.4assets -liabilitiesRatio of18.6%21.9%25.2%22.3%25.2%liabilities to assetsData Source: Board of Governors of the Federal Reserve System 2003 by The Mc

10、Graw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 9Categories of Consumer Borrowingw Financial analysts frequently divide the credit extended to consumers into three broad categories.Residential mortgage credit used to support the purchase of homesInstallment credit used primaril

11、y for long-term nonresidential purposesNoninstallment credit used for short-term cash needs 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 10Home Equity Loansw Like traditional home mortgages, a home equity loan is secured by a borrowers home.w Unlike traditional

12、 home mortgages however, many home equity loans consist of a revolving credit line that the borrower can draw on for purchases of any goods or services. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 11Credit and Debit Cardsw A credit card permits the consumer to

13、 buy now and pay later, while a debit card provides a convenient way of paying now.w Convenience users substitute credit cards for cash, while installment users maintain large outstanding credit card balances.w A smart card is closely related to the debit card. 2003 by The McGraw-Hill Companies, Inc

14、. All rights reserved.McGraw Hill / Irwin23 - 12The Determinants of Consumer Borrowingw The consumers decision about when and how much to borrow is influenced by:the size of the individual or family income and accumulated household wealththe stage in lifethe business cycleprice expectationsinterest

15、rates 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 13Consumer Lending Institutionsw Financial intermediaries banks, savings and loan associations, credit unions, and finance companies account for most of the loans made to consumers in the U.S. economy.w However

16、, a growing share of consumer loans are being sold off the balance sheets and placed in loan pools (securitization).w In recent years, institutions also tend to diversify their lending operations. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 14Consumer Lending

17、InstitutionsSource: Board of Governors of the Federal Reserve System 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 15Consumer Lending Institutionsw Commercial banks approach the consumerby direct lending,through purchases of installment paper from merchants, and

18、 by making loans to other consumer lending institutions.w Finance companies have a long history of active lending in the consumer installment field, both directly and indirectly. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 16Consumer Lending Institutionsw Savi

19、ngs and loans and savings banks have long been dominant in residential mortgage lending, though they are also aggressively expanding their portfolios.w “Check cashing” companies, “title loan” companies, and “pawn shops” lend primarily to distressed borrowers. 2003 by The McGraw-Hill Companies, Inc.

20、All rights reserved.McGraw Hill / Irwin23 - 17Factors Considered in Making Consumer Loansw Consumer loans usually carry greater risk than most other kinds of loans, although they also tend to be more profitable.w Hence, most loan officers carefully considerthe ratio of household debt to gross income

21、the duration of employment of the borrowerthe past payment record (credit integrity)ownership of valuable propertiesthe number of breadwinners in the family 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 18Financial Disclosure and Consumer Creditw Important new l

22、aws have been designed in recent years to protect consumers in their dealings with lending institutions, especially with respect to financial disclosure.Consumer Credit Protection Act (1968) (Truth in Lending)Fair Credit Reporting Act (1970)Fair Credit Billing Act (1974)Consumer Leasing Act (1976) 2

23、003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 19Financial Disclosure and Consumer CreditCompetitive Banking Equality Act (1987)Fair Credit and Charge Card Disclosure Act (1988)Truth in Savings Act (1991)Financial Services Modernization (Gramm-Leach-Bliley) Act (1

24、999) 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 20Credit Discrimination Lawsw The civil rights movement has had an impact on the granting of consumer loans.Equal Credit Opportunity Act (1974, amended 1976)Fair Housing Act (1968)Home Mortgage Disclosure Act (1

25、975)Community Reinvestment Act (1977)Financial Institutions Reform, Recovery, and Enforcement Act (1989) 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 21Consumer Bankruptcy Lawsw The right to declare bankruptcy is designed to give individuals and businesses a fr

26、esh start, helping them to work themselves out from under a crippling burden of debt. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 22Consumer Bankruptcy Lawsw Consumers filing for bankruptcy primarily use one of two methods.Filing for bankruptcy under Chapter 7

27、 normally completely discharges all of a households unsecured debts.A Chapter 13 bankruptcy filing usually sets in motion a new debt repayment plan to work gradually out of the debts owed. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 23Consumer Bankruptcy Lawsw

28、 In view of the soaring number of bankruptcy filings and in an effort to lower the cost of consumer credit for most borrowers, proposals have been made to make bankruptcy a more costly process and to encourage the development of more financial education courses for consumers. 2003 by The McGraw-Hill

29、 Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 24Money and Capital Markets in Cyberspacew Learn more about the various aspects of consumer lending and borrowing by visiting:/research/http:/ 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill /

30、Irwin23 - 25Chapter Revieww Consumers as Lenders of FundsFinancial Assets Purchased by ConsumersThe Growing Menu of Savings Instruments Available to Consumers Todayw Consumers as Borrowers of FundsIs Consumer Borrowing Excessive?Categories of Consumer Borrowingw Home Equity Loans 2003 by The McGraw-

31、Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 26Chapter Revieww Credit and Debit Cardsw The Determinants of Consumer Borrowingw Consumer Lending InstitutionsCommercial BanksFinance CompaniesOther Consumer Lending Institutionsw Factors Considered in Making Consumer Loans 2003 by Th

32、e McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 27Chapter Revieww Financial Disclosure and Consumer Creditw Credit Discrimination Lawsw Consumer Bankruptcy Laws 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 28Money and Capital Markets24

33、C h a p t e rEighth EditionFinancial Institutions and Instruments in a Global MarketplacePeter S. RoseMcGraw Hill / IrwinSlides by Yee-Tien (Ted) FuThe Residential Mortgage Market 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 29 Learning Objectives w To understa

34、nd how the residential mortgage market supplies credit to build and buy homes.w To learn about the problems faced by families and individuals in finding credit to finance the purchase of their homes.w To see the problems faced by lenders in designing new home loan contracts that will protect them ag

35、ainst inflation and other risks. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 30 Learning Objectives w To look at how federal government agencies and government-sponsored mortgage firms support the development of the market for mortgage loans. 2003 by The McGra

36、w-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 31Introductionw Among the fastest growing of all financial markets today is the residential mortgage market, where individuals and families fund their purchases of homes.w Originally a simple market that was primarily local and regio

37、nal in character, the residential mortgage market has become an international capital market where home-mortgage-related instruments are traded around the globe. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 32Recent Trends in New Home Prices and the Terms of Mo

38、rtgage LoansAverage Terms Quoted on Conventional Home Mortgage Loans (U.S. Primary Market)1974 1980 1990 2000 Purchase price ($000)$40.10$83.50$153.20$234.50Amount of loan ($000)29.8059.30112.40177.00Loan/price ratio (%)74.3073.3074.5077.40Maturity (years)26.3028.2027.3029.20Fees & charges (poin

39、ts)1.30%2.10%1.93%0.70%Contract interest rate (%)8.7112.259.687.41FHA mortgage yield (%)9.2213.9510.177.45* FHA mortgage yield is for 1999.Data Source: Board of Governors of the Federal Reserve System, 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 33The Structur

40、e of the Mortgage Market010002000300040005000600070008000196119661971197619811986199119962001Data Source: Board of Governors of the Federal Reserve SystemOutstanding Mortgage Loans in the U.S.$ billionsTotal Mortgage DebtResidential Properties(1-4 family & multifamily)Nonresidential Properties(c

41、ommercial & farm) 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 34The Structure of the Mortgage MarketFlow of SavingsGovernment loans to mortgage lendersCommercial banks & bank holding co.Savings & loan associationsSavings banksCredit unionsReal esta

42、te investment trustsInsurance co.Pension plansMutual fundsIndividual domestic investorsForeign investorsConventional home mortgage loansMortgage banksGovernment guaranteed home loansCommercial mortgage loansFarm & ranch mortgage loansPrivate mortgage pools (securitized loans)Federal & federa

43、lly sponsored mortgage agenciesBuilders & developers of residential & commercial propertiesHome buyers, business firms, & other recipients of mortgage credit 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 35Mortgage Lending InstitutionsSource: Board o

44、f Governors of the Federal Reserve System24 - 35 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 36Mortgage Lending Institutionsw Most mortgages generate multiple potential cash-flow streams:origination & commitment fees (when a mortgage loan is first applied

45、for)periodic loan repayments & loan interestcompensation for prepayment & default risksservice fees associated with collecting & recording amounts owednet returns & fees from the securitization of a pool of mortgage loans 2003 by The McGraw-Hill Companies, Inc. All rights reserved.Mc

46、Graw Hill / Irwin23 - 37Mortgage Lending Institutionsw A mortgage loan may beheld in the originating lenders portfolio for the promised interest and principal payments,sold to an investor at a discounted value (although the originating lender may retain servicing rights and charge the loan purchaser

47、 loan servicing fees), orpackaged with other similar mortgage loans into a pool and securitized (the lender receives residual interest income and servicing fees). 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 38The Roles Played by Financial InstitutionsIn the Mo

48、rtgage Marketw Savings and loan associations (S&Ls) are predominantly local lenders. They often service the mortgage loans they made.w Commercial banks rank first as lenders for the purchase of homes, condominiums, and apartments, and in the commercial mortgage sector.w Savings banks invest in b

49、oth government-guaranteed and conventional mortgage loans. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 39The Roles Played by Financial InstitutionsIn the Mortgage Marketw Life insurance companies make substantial investments in commercial as well as residentia

50、l mortgage properties, both nationally and internationally.w Mortgage banking houses act as a channel through which builders or contractors in need of long-term funds can find permanent mortgage financing. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 40Governme

51、nt Activityw The Great Depression generated massive, unprecedented unemployment, such that there were thousands of foreclosures, property values fell, and many mortgage lenders faced liquidity crises.w So, the U.S. federal government had to move in to tackle the mortgage markets problems, through go

52、vernment guarantees and the development of a secondary market. 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 41Government Activityw The major milestones include:1932: Federal Home Loan Bank System1934: National Housing Act, Federal Housing Administration1938: Fe

53、deral National Mortgage Association (Fannie Mae)1944: Servicemens Readjustment Act, Veterans Administration 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 42Government Activity1968: Government National Mortgage Association (Ginnie Mae) (Its pass-throughs are popu

54、lar with investors as safe, readily marketable securities with attractive rates of return.) 1970: Federal Home Loan Mortgage Corporation (Freddie Mac) (Its mortgage-backed securities include mortgage participation certificates (PCs), guaranteed mortgage certificates (GMCs), collateralized mortgage o

55、bligations (CMOs), and real estate mortgage investment conduits (REMICs).) 2003 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw Hill / Irwin23 - 43Innovations in Mortgage Instrumentsw The problems created by fixed-rate mortgages (FRMs) led to the development of variable-rate mortgages (VRMs) and adjustable mortgage instruments (AMIs).w Volatile interest rates also led to the development of convertible mortgage instruments (CMIs) and balloon loans.w Reverse-annuity mortgages (RAMs) have also been developed to help older families. 2003 by The Mc