Dec
15
Mark Bennett asked:
Current mortgage rates predictions for the USA are that mortgage interest rates will remain at historically low levels until after the Federal election in November, and then begin to rise sharply. Home owners in the US may not feel that mortgage interest rates are at historically low levels, because there has been a slow upward creep in interest rates over the past two years, and current mortgage interest rates are higher than they have been since early this century.
However, this view is only viable for those with short memories – and the very young. Not since the 1960s has there been such a sustained period of low mortgage interest rates.
Mortgage interest rates predictions are on the rise, because of a number of important economic pressures.
1. Rising Inflation
The rate of inflation is calculated into the interest rates charged for mortgages, credit cards, and other forms of lending. Rising oil prices, and teh resulting rises in the price of transport, food, heating, and other necessities, will feed into a higher rate of inflation in the near future. This will put upward pressure on mortgage rates predictions.
2. Falling US Dollar
As a result of the sub-prime crisis, which has now spread to the prime mortgage market due to excessive forced sales and falling property values, the entire US financial system is regarded by the rest of the world as unstable. This is resulting in a flight of capital from the US. The only way to entice capital to remain in the US, and thus halt the slide in the US dollar, is to pay a higher return, which means having a higher general interest rate within the US.
Until the US dollar stabilises, there will be significant upward pressure on mortgage interest rates predictions.
3. Increased Risk
Plummeting house prices as a result of forced sales makes mortgage lending in general more risky. Even a 20% deposit has not been enough to prevent some home owners from finding themselves upside down on their mortgages. Mortgages classified as “prime” are now showing up as losses on the books of some banks. The response to increased risk is always to require a higher return – in this case, a higher interest rate on mortgages. Mortgage rates predictions must be for higher interest rates as a result of the mess in the residential real estate markets across the country.
The Bottom Line
Combine these immediate pressures with a history over the past 50 years for mortgage interest rates to average much higher than the current mortgage rate of 6% to 7%, and you have the recipe for some steep increases in mortgage interest rates – but most likely not until after the Federal election. Political pressures are also something that mortgage rates predictions must take into account!
Tracy
Current mortgage rates predictions for the USA are that mortgage interest rates will remain at historically low levels until after the Federal election in November, and then begin to rise sharply. Home owners in the US may not feel that mortgage interest rates are at historically low levels, because there has been a slow upward creep in interest rates over the past two years, and current mortgage interest rates are higher than they have been since early this century.
However, this view is only viable for those with short memories – and the very young. Not since the 1960s has there been such a sustained period of low mortgage interest rates.
Mortgage interest rates predictions are on the rise, because of a number of important economic pressures.
1. Rising Inflation
The rate of inflation is calculated into the interest rates charged for mortgages, credit cards, and other forms of lending. Rising oil prices, and teh resulting rises in the price of transport, food, heating, and other necessities, will feed into a higher rate of inflation in the near future. This will put upward pressure on mortgage rates predictions.
2. Falling US Dollar
As a result of the sub-prime crisis, which has now spread to the prime mortgage market due to excessive forced sales and falling property values, the entire US financial system is regarded by the rest of the world as unstable. This is resulting in a flight of capital from the US. The only way to entice capital to remain in the US, and thus halt the slide in the US dollar, is to pay a higher return, which means having a higher general interest rate within the US.
Until the US dollar stabilises, there will be significant upward pressure on mortgage interest rates predictions.
3. Increased Risk
Plummeting house prices as a result of forced sales makes mortgage lending in general more risky. Even a 20% deposit has not been enough to prevent some home owners from finding themselves upside down on their mortgages. Mortgages classified as “prime” are now showing up as losses on the books of some banks. The response to increased risk is always to require a higher return – in this case, a higher interest rate on mortgages. Mortgage rates predictions must be for higher interest rates as a result of the mess in the residential real estate markets across the country.
The Bottom Line
Combine these immediate pressures with a history over the past 50 years for mortgage interest rates to average much higher than the current mortgage rate of 6% to 7%, and you have the recipe for some steep increases in mortgage interest rates – but most likely not until after the Federal election. Political pressures are also something that mortgage rates predictions must take into account!
Tracy
Apr
19
Rob K. Blake asked:
Big banks are determined to kill of their mortgage competition by deceiving consumers into believing it was the brokers who cause the housing crisis. The bankers are using the media to pump story after story with one message: Don’t trust mortgage brokers.
And it’s working!
How rare it is to hear a media story or an industry professional say something nice about mortgage brokers.
Heck, I’d settle for a story that was simply accurate!
Mortgage Brokers Marginalized
One of the biggest over-reactions politicians will have to the mortgage crisis is sweeping State and Federal legislation putting truly unreasonable restrictions on mortgage brokers…restrictions the banks will never see!
It’s happened in my State of Colorado. What use to be a State too lax in regulating mortgage brokers has now gone overboard coming out with a new requirement every couple of months. The first regulation was the background checks and the surety bonds. Then came the O&E insurance and testing requirements all designed supposedly to “protect the public” when in reality it’s just another way to consolidate the mortgage market in the hands of just a few mega-banks.
All of this bad press and regulatory red-tape has pushed thousands of good folks out of the business and marginalized the reputations of those that remain.
Mortgage Market Dominated By Five Banks
Paul Muolo writes,
“We can all sleep again, knowing that the big boys are stable, and together control 67% of the mortgage market in terms of receivables on first and second liens. Here’s how the servicing numbers shake out in terms of market share: Bank of America (21.68%), Wells Fargo (17.65%), Chase Home Finance (15.09%), CitiMortgage (8.49%) and Residential Capital LLC (4.14%).
Now for the bad news: the top five control 67% of the residential servicing market, which means in my book most of these firms are “too big too fail” just like Fannie and Freddie were. Think about it for a second: what if something goes wrong with Bank of America, which now services $2 trillion in home mortgages for American consumers? I’m not saying Bank of America is in danger financially but we’ve created a financial system – for better or worse – where too much risk is in the hands of too few. There’s something wrong with that.”
Did you catch that?
The top five banks now control almost 70% of the mortgage servicing market…and it’s not over!
Putting the blame on mortgage brokers for the mortgage crisis tells me they have their eye on dominating the retail side of the market as well.
Will Mega-Banks Take Over Retail Too?
Paul is a smart guy and wrote one of the best books on the mortgage crisis available called Chain of Blame…if you really want to know who caused the crisis…don’t read media stories…read that book.
Paul’s contention we are creating another “too big to fail” problem is well taken, but I’ll go one further. The devastation to the mortgage broker side of the industry is real and if the battle for the retail mortgage market is lost to a meg-bank propaganda campaign, it’s the consumer who will suffer most.
If we let these mega-banks “win”, the cost of getting a mortgage will skyrocket.
Law makers and reporters should be watchful not to be turned into a dupe for the banking industry.
At one time mortgage brokers originated 70% of all first mortgage applications, but the continuous hatch job the banks perpetrated through the media and State legislators is having the desired effect. Mortgage originations are now 60% in favor of banks…a big switch in just a few years.
I am not saying that mortgage brokers did not deserve the bad press. Many of them did…but certainly not all. Of course, it’s not easy for the average mortgage consumer to tell the difference between “good guys” ands “bad guys” when it comes to mortgage brokers. We can help on that front. We instruct people finding ethical, professional mortgage brokers every day with our website, articles, and reviews.
If consumers do not patronize the local mortgage brokers, they will wake up one day and the only place to apply for a mortgage is at a “mega-bank”.
Gosh, I hope not!
Cecil
Big banks are determined to kill of their mortgage competition by deceiving consumers into believing it was the brokers who cause the housing crisis. The bankers are using the media to pump story after story with one message: Don’t trust mortgage brokers.
And it’s working!
How rare it is to hear a media story or an industry professional say something nice about mortgage brokers.
Heck, I’d settle for a story that was simply accurate!
Mortgage Brokers Marginalized
One of the biggest over-reactions politicians will have to the mortgage crisis is sweeping State and Federal legislation putting truly unreasonable restrictions on mortgage brokers…restrictions the banks will never see!
It’s happened in my State of Colorado. What use to be a State too lax in regulating mortgage brokers has now gone overboard coming out with a new requirement every couple of months. The first regulation was the background checks and the surety bonds. Then came the O&E insurance and testing requirements all designed supposedly to “protect the public” when in reality it’s just another way to consolidate the mortgage market in the hands of just a few mega-banks.
All of this bad press and regulatory red-tape has pushed thousands of good folks out of the business and marginalized the reputations of those that remain.
Mortgage Market Dominated By Five Banks
Paul Muolo writes,
“We can all sleep again, knowing that the big boys are stable, and together control 67% of the mortgage market in terms of receivables on first and second liens. Here’s how the servicing numbers shake out in terms of market share: Bank of America (21.68%), Wells Fargo (17.65%), Chase Home Finance (15.09%), CitiMortgage (8.49%) and Residential Capital LLC (4.14%).
Now for the bad news: the top five control 67% of the residential servicing market, which means in my book most of these firms are “too big too fail” just like Fannie and Freddie were. Think about it for a second: what if something goes wrong with Bank of America, which now services $2 trillion in home mortgages for American consumers? I’m not saying Bank of America is in danger financially but we’ve created a financial system – for better or worse – where too much risk is in the hands of too few. There’s something wrong with that.”
Did you catch that?
The top five banks now control almost 70% of the mortgage servicing market…and it’s not over!
Putting the blame on mortgage brokers for the mortgage crisis tells me they have their eye on dominating the retail side of the market as well.
Will Mega-Banks Take Over Retail Too?
Paul is a smart guy and wrote one of the best books on the mortgage crisis available called Chain of Blame…if you really want to know who caused the crisis…don’t read media stories…read that book.
Paul’s contention we are creating another “too big to fail” problem is well taken, but I’ll go one further. The devastation to the mortgage broker side of the industry is real and if the battle for the retail mortgage market is lost to a meg-bank propaganda campaign, it’s the consumer who will suffer most.
If we let these mega-banks “win”, the cost of getting a mortgage will skyrocket.
Law makers and reporters should be watchful not to be turned into a dupe for the banking industry.
At one time mortgage brokers originated 70% of all first mortgage applications, but the continuous hatch job the banks perpetrated through the media and State legislators is having the desired effect. Mortgage originations are now 60% in favor of banks…a big switch in just a few years.
I am not saying that mortgage brokers did not deserve the bad press. Many of them did…but certainly not all. Of course, it’s not easy for the average mortgage consumer to tell the difference between “good guys” ands “bad guys” when it comes to mortgage brokers. We can help on that front. We instruct people finding ethical, professional mortgage brokers every day with our website, articles, and reviews.
If consumers do not patronize the local mortgage brokers, they will wake up one day and the only place to apply for a mortgage is at a “mega-bank”.
Gosh, I hope not!
Cecil