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. Restricted Cash

    Monies earmarked for a specific purpose and therefore not available ...
  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. Lender-Paid Private Mortgage Insurance

    Private mortgage insurance that a mortgage lender pays on behalf ...
  5. Restricted Stock

    Insider holdings that are under some other kind of sales restriction. ...
  6. Substandard Insurance

    An insurance policy issued to someone who does not qualify for ...
Related Articles
  1. Personal Finance

    Insuring Federal Housing Authority Mortgages

    This insurance has an edge over private mortgage insurance. Find out why.
  2. Personal Finance

    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 ...
  3. Markets

    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, .
  4. Investing

    Understanding the Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  5. Personal Finance

    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.
  6. Personal Finance

    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. Personal Finance

    Understanding The Mortgage Payment Structure

    While a mortgageā€™s size and term set the baseline, the interest, taxes and insurance all influence the amount of the monthly payment.
  8. Trading

    How Are International Exchange Rates Set?

    International exchange rates show how much one unit of a currency can be exchanged for another currency.
  9. Personal Finance

    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 ...
  10. Retirement

    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.
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. Do I still need private home owner insurance before closing?

    I have a pending FHA loan of $79,800 with a down payment of 3.5%. I was told insurance is included.  ... Read Answer >>
  3. 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 >>
  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. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center