The residential mortgage supply function of commercial banks

The paper develops a residential supply function for approved fixed-rate mo rtgages in US commercial banks as a first step to explain differences in or igination patterns among groups of borrowers. It models the lender's decisi on to offer the borrower a risk-adjusted loan bundle relative to the terms on the credit application, The model includes multiple dependent variables that are risk-adjusted simultaneously to reflect accurately the loan office r's decision. Canonical correlation factor analysis is used to capture the lender's simultaneous decision, The loan-price ratio and contract interest rate are the most important variables in the lender supply function.