Why are mortgage interest rates rising near such impossible report give or take a few the cutback?
Answers:
Because near so many people declare bankruptcy the mortgage companies have to lift rates to cover their losses.
mortgage interest is rising because the problem of usa started from mortgage. people were defaulting so they have to increase revenue to offset some failure from the others.
The above answers are BEYOND STUPID because, based on their logic, NEW lenders who do not have loses to verbs can enter the market and clean up. They can underprice existing lenders and drive out the weak players. The basic piece of knowledge that they are missing is that interest rates for a loan beside given characteristics are a COMMODITY!
The interest rate (lets call it r) on a given loan has three or more components:
r = risk free authentic interest rate + inflation premium + credit risk premium.
Other components may include premia for prepayment risk, interest rate risk, foreign exchange risk, sovereign risk, and the list can go on.
When the reduction takes a turn for the worse, the ability of borrowers, on average, is impair. To compensate for this increased credit risk, lenders increase the credit risk premium, which in turn causes a one-for-one increase surrounded by the interest rate r.
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