Restricted Market

DEFINITION of 'Restricted Market'

A market which does not allow for a free-floating exchange rate, such as a region whose exchange rate is heavily controlled by the government and only partly influenced by general economic variables.

An example of a restricted market would be a currency that is pegged to another country's currency. A blocked currency market is more controlled than a restricted market, and a free market is less controlled. Restricted markets are not limited to currency, but include most types of market activities that are closely monitored and regulated.

BREAKING DOWN 'Restricted Market'

In the aftermath of the housing crisis of the late 2000s, the Mortgage Guaranty Insurance Corporation declared various cities and some entire states to be restricted markets for mortgage insurance because they considered them too weak/risky. These areas included the states of Arizona, California, Florida and Nevada and the cities of Honolulu, Detroit, Baltimore and Minneapolis, among many others.

This restriction meant that the company would not insure loans for greater than 95% of the property's value, loans for investment properties or cash-out refinances. Potential buyers needed to have at least a 5% down payment to take out a mortgage with a lender who obtained its private mortgage insurance through the Mortgage Guaranty Insurance Corporation. Other mortgage-insurance companies enacted similar restrictions.

RELATED TERMS
  1. Exchange Control

    Types of controls that governments put in place to ban or restrict ...
  2. Restricted Asset

    Money or other items of value received by or promised to an organization, ...
  3. Convertible Currency

    A currency that can be readily bought or sold without government ...
  4. Restricted Stock

    Insider holdings that are under some other kind of sales restriction. ...
  5. Mortgage Insurance

    An insurance policy that protects a mortgage lender or title ...
  6. Lender-Paid Private Mortgage Insurance

    Private mortgage insurance that a mortgage lender pays on behalf ...
Related Articles
  1. Insurance

    Why You Don’t Need Mortgage Protection Life Insurance

    Mortgage protection life insurance sounds great in concept - a guarantee that your mortgage will be paid off if you die unexpectedly. But take a hard look at what you get before choosing it.
  2. Forex

    History Of Exchange Rates

    How exchange rates are determined today
  3. Credit & Loans

    Mortgage Basics: Costs

    By Lisa SmithPeople generally think about a mortgage in terms of the monthly payment. While that payment represents the amount of money needed each month to cover the debt on the property, the ...
  4. Wealth Management

    The Most Important Factors that Affect Mortgage Rates

    Discover what the most important factors are that affect mortgage interest rates. Factors range from inflation and economic growth to Federal Reserve activity, .
  5. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  6. Home & Auto

    Shopping for a mortgage in 2016? Use this tool first.

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2016 can all be done online.
  7. Home & Auto

    Understanding The Mortgage Payment Structure

    While a mortgage’s size and term set the baseline, the interest, taxes and insurance all influence the amount of the monthly payment.
  8. Credit & Loans

    Guidelines for FHA Reverse Mortgages

    FHA guidelines protect borrowers from major mistakes, prevent lenders from taking advantage of borrowers and encourage lenders to offer reverse mortgages.
  9. Economics

    How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  10. Credit & Loans

    Mortgage Basics: Conclusion

    By Lisa SmithLet's recap what we've learned in this tutorial: At its most basic, a mortgage is a loan used to purchase a house. There are two primary types of mortgages: fixed rate and ...
RELATED FAQS
  1. What are restricted shares?

    Understand what a restricted share is. Learn why a company would issue restricted shares to employees and why an employee ... Read Answer >>
  2. How can I avoid paying private mortgage insurance (PMI)?

    Private mortgage insurance (PMI) is an insurance policy that protects lenders from the risk of default and foreclosure, and ... Read Answer >>
  3. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
  4. What happens to insurance policies and variable annuities if the insurance company ...

    The idea of an insurance failing or going bankrupt is one that can be very frightening. However, when an insurance company ... Read Answer >>
  5. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Understand the difference between a conventional mortgage that requires primary mortgage insurance and a Federal Housing ... Read Answer >>
  6. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center