Mortgage rates tumbled, as short-term mortgage rates shot up higher sending the share of variable rate applications tumbling.
The share of adjustable rate mortgage application sank though a big drop in yield of the 1year Treasury-indexed ARM may change that. However, latest report suggests that late payments on subprime adjustable-rate mortgages have increased for eight consecutive quarters and currently sit near 17%, while delinquency improved on the fixed rate mortgages and loans insured by the Federal Housing Administration. Fueled by activity in just four states, foreclosure continued to rise during the latest quarter.
Among the rising fears, one is that the sub-prime mortgage crisis is beginning to infect Americas $300 car loan market as evidence emerges of a surge in the numbers of motorists in arrears. Lenders who made more than 40,000 sub-prime car loans in 2006 saw the percentage on those in arrears jump from 6.8% to 8%, while smaller lenders who lend to offer loans to higher risk customers saw their arrears levels more than double from 6.2% in 2005 to 14.6% in 2006. Wall Street is worried that the same mortgage borrowers who are falling behind with their home loan repayments will also miss repayments on their car loans.
The housing slump in the country is causing financial pain to banks that provided expensive home loans to low-income householders with poor credit ratings. The sub-prime car loan market targets the same risky borrowers. Like the mortgage market, sub-prime car loan companies package loans and sell them to financial investors.
Tighter lending conditions around expanding subprime mortgage market could even splash some cold water on the housing sector in the months ahead. Some lenders in the alternative mortgage market have already jacked up mortgage rates or withdrawn products in the face of rising costs. Several subprime lenders even have raised their mortgage rates by 100 basis points in the past three weeks. Commenting on the impact of the issue, Alex Haditaghi, chief executive officer of MotgageBrokers.Com, a publicly traded mortgage company, said, it will affect not all consumers, but a niche market however, that niche market is one with very active house buyers.
Most economists figure that the market is ripe for a slowdown anyway. Canada Mortgage and Housing Corporation, for example, expects housing starts will slip 3% this year and about 6% next year. However, the credit squeeze is on the run that began in the US and has rippled throughout the world as a potential risk.
Earnings and liquidity continue to preoccupy executives and boardrooms of mortgage companies though some merger activity maintained. But as lenders grapple with unprecedented chaos in the mortgage market, class action attorneys are busy filing numerous lawsuits alleging investors were deceived.
Global markets continued to reflect concerns about economic impact of the crisis. The dollar fell to a record low against the euro and US equities also decline. Although some markets have already improved since the turmoil but the crisis would unwind at different rates in different markets.
3 Things To Look For In A Home Purchase Lender Online
If you’re ready to buy a new house, you’re going to need a Home Purchase lender. And finding one online is convenient and simple! However, there are a few things you should look out for to ensure that your lender has your interests–and not his–as his top priority.
Make sure your lender offers options
There are a lot of options other than the traditional 30-year fixed rate mortgage. Depending on your needs and personal situation, an Adjustable Rate Mortgage (ARM) or Interest-Only mortgage might be a better fit for you. Or, possibly, you may prefer a loan with a longer or shorter term. A good lender should be able to offer you a variety of options so you can find the one that best suits your needs. Be wary of any lender that tries to push one particular type of loan.
Get your “pre-approval” in writing
Some Home Purchase lenders will “pre-qualify” you–but that doesn’t mean you’re guaranteed to get the loan! In fact, in most cases, “pre-qualification” means almost nothing at all. Choose a lender who will “pre-approve” your application instead, which is a more involved process. When you’ve been “pre-approved,” the loan officer has contacted your employer, bank, credit card companies, etc. Once you’re “pre-approved,” you’re a lot more likely to get the final approval on your loan.
“Lock in” the rate you’re quoted
Interest rates change almost daily–they can be down on Monday, and sky-high by Friday! And some lenders will quote you a super low rate to get your business, even though they know the rate may change by the time your loan is finalized. If a lender quotes you an interest rate, ask him/her to “lock it in” for 30, 60 or 90 days. Reputable online Home Purchase lenders will guarantee you your promised rate even if it takes another month or two until you close the loan.
Once you know your online Home Purchase lender is willing to offer you options, pre-approve your loan, and lock-in your rate, it’s time to compare rates, fees and other charges to make sure you’re getting the best deal.