Interest and non-interest terms in the process of mortgage market clearing: a rejoinder

Abstract

In his reply to my comment Browne claims that the failure of variations in the downpayment ratio to shift market demand "is no more than a mere hypothesis which does not ,..., possess much apriori appeal." The bases of my argument is twofold. First, market demand is simply the horizontal aggregation of individual demands. Second, when individuals cannot secure their desired demand at the prevailing price there is no reason to assume that they will automatically exit from the market. If these are unappealing hypotheses then we require a drastic rewriting of basic microeconomic texts.