What you meditate that Bank Mortgage rates will stay lower as presently for long occupancy?
Bank are here to make money not to loose money, it looks like for short possession that rates are low. What you think?
Answers:
Its not so much the banks choice as a combo of what rates the fed sets and what money is available to lend versus what is needed (ie supply and demand). That said I suspect they'll stay low for awhile and later creep up, but who knows.
rates enjoy been really low...but in my view...they are on their way up. Get a low rate now and lock it contained by by paying a lock in fee. Get the wall or mortgage company to sign a paper so that you know how long you have to close on a strange or existing mortgage.
Yes, rates remain somewhat low historically speaking. No, mortgage rates have nought to do with the Fed Funds rate.
No, low interest rates are not to blame for people loosing their homes. Greed, timebomb loans and irresponsible borrowing and lend, declining markets and fraudulent appraisals be the real culprits. This is the perfect storm for a mortgage crisis.
Banks construct there money when they originate loans (junk fees), trade the loans to FNMA and FHLMC (gain on the sale by originating at premium rates) and through servicing income (they spawn 0.25% per year for processing payments and performing various other admin tasks on the loans the originate.
They do not unanimously hold the paper as they would be exposed the the interest rate risk that caused the S&L crisis 20 years ago. That is, if you derive a loan at 6% and rates go to 7%, your 6% mortgage would be worth less than the obverse amount as it would have to be sold to yield 7%. It may lose as much as 10% of its advantage. That would errode a banks capital approaching nothing else and could lead to its insolvency which would threaten the deposit insurance fund.
What rates will do surrounded by the future is pure speculation. Some market analyst are calling for the 10 year bond yield to fall by the end of the year. If that happen, the required net yields on the mortgage wager on securities in the secondary market(which drives what rates bank can afford to offer in the retail/primary mortgage market) should stumble as well.
With that being said, my nouns professor told me that we, as consumers, should not speculate about what will happen near interest rates. That is, if you need to borrow and you find a rate that you like, you should lift it because it may not be there tomorrow. How true that wisdom ring this January when rates dipped to about 5.375% on a 30 year for about 6 hours up to that time they shot back up 0.5% when the stock market started its recuperate.
Who is really loosing money? The people who insure the loans that are going in to non-attendance; the FHA, VA and the PMI companies and some of these other companies that supposedly insured the uninsurable loans called non-prime/sub-prime loans (these companies could not possiblly have charged satisfactory to cover the losses on the loans they insured so they are largely bankrupt) and everyone who had investments in companies that bought into these pools of sub-prime loans.
Between the diminished home equity and actual losses due to default, I believe the that the actual losses will be around 2 trillion dollars by the time the crisis is really over.
All those people who talk almost Bears Stern being a watershed are clueless about the liability that Countrywide has failed to recoginize. I suppose there could be hundreds of billions that will be scuttled if the merger beside Bank of America goes through. Another back room accord in the making in the heading of the governments "too big to fail" doctrine. Source(s): BS Finance, 7 years mortgage lending experience.
they can't keep the rates too low for too long (thats to a degree how we got into this entire housing mess) because rates were so low culture could spend more than they could afford and then the rates rest - blowing everyone out of the water on budgets
Related Questions:
Who else disagrees beside Hillary's proposal to freeze mortgage interest rates for five years?
even though this is the adjustable rate CONTRACT that borrowers signed into. Talk about government control... I think borrowers and lenders should sit down and rehash their contracts on their own as it does not serve the lender's...
Answers:
Its not so much the banks choice as a combo of what rates the fed sets and what money is available to lend versus what is needed (ie supply and demand). That said I suspect they'll stay low for awhile and later creep up, but who knows.
rates enjoy been really low...but in my view...they are on their way up. Get a low rate now and lock it contained by by paying a lock in fee. Get the wall or mortgage company to sign a paper so that you know how long you have to close on a strange or existing mortgage.
Yes, rates remain somewhat low historically speaking. No, mortgage rates have nought to do with the Fed Funds rate.
No, low interest rates are not to blame for people loosing their homes. Greed, timebomb loans and irresponsible borrowing and lend, declining markets and fraudulent appraisals be the real culprits. This is the perfect storm for a mortgage crisis.
Banks construct there money when they originate loans (junk fees), trade the loans to FNMA and FHLMC (gain on the sale by originating at premium rates) and through servicing income (they spawn 0.25% per year for processing payments and performing various other admin tasks on the loans the originate.
They do not unanimously hold the paper as they would be exposed the the interest rate risk that caused the S&L crisis 20 years ago. That is, if you derive a loan at 6% and rates go to 7%, your 6% mortgage would be worth less than the obverse amount as it would have to be sold to yield 7%. It may lose as much as 10% of its advantage. That would errode a banks capital approaching nothing else and could lead to its insolvency which would threaten the deposit insurance fund.
What rates will do surrounded by the future is pure speculation. Some market analyst are calling for the 10 year bond yield to fall by the end of the year. If that happen, the required net yields on the mortgage wager on securities in the secondary market(which drives what rates bank can afford to offer in the retail/primary mortgage market) should stumble as well.
With that being said, my nouns professor told me that we, as consumers, should not speculate about what will happen near interest rates. That is, if you need to borrow and you find a rate that you like, you should lift it because it may not be there tomorrow. How true that wisdom ring this January when rates dipped to about 5.375% on a 30 year for about 6 hours up to that time they shot back up 0.5% when the stock market started its recuperate.
Who is really loosing money? The people who insure the loans that are going in to non-attendance; the FHA, VA and the PMI companies and some of these other companies that supposedly insured the uninsurable loans called non-prime/sub-prime loans (these companies could not possiblly have charged satisfactory to cover the losses on the loans they insured so they are largely bankrupt) and everyone who had investments in companies that bought into these pools of sub-prime loans.
Between the diminished home equity and actual losses due to default, I believe the that the actual losses will be around 2 trillion dollars by the time the crisis is really over.
All those people who talk almost Bears Stern being a watershed are clueless about the liability that Countrywide has failed to recoginize. I suppose there could be hundreds of billions that will be scuttled if the merger beside Bank of America goes through. Another back room accord in the making in the heading of the governments "too big to fail" doctrine. Source(s): BS Finance, 7 years mortgage lending experience.
they can't keep the rates too low for too long (thats to a degree how we got into this entire housing mess) because rates were so low culture could spend more than they could afford and then the rates rest - blowing everyone out of the water on budgets
Related Questions:
Who else disagrees beside Hillary's proposal to freeze mortgage interest rates for five years?
even though this is the adjustable rate CONTRACT that borrowers signed into. Talk about government control... I think borrowers and lenders should sit down and rehash their contracts on their own as it does not serve the lender's...