Times have changed drastically in the mortgage world because of recent happenings. What can we expect to happen? Is there any way to know if the rates will continue to improve?
With credit conditions so por and so many foreclosures casting a pall over the mortgage industry, one would think that those candidates for mortgages with good credit histories would be able to name their rate when it comes to a mortgage. But it appears that banks are actually increasing rates, in the hope that will improve their revenue.
This seems like a bad business decision; normally a business will lower prices when business is bad so that they can get whatever business they can. Matters in the banking industry are far from normal, right now, and credit card companies are also using this strategy of higher rates to increase revenue in this tight market.
In the good old days, a slowdown in the economy would usually mean a lowering of interest rates since lenders would try to attract more customers with attractive rates. Matters are not like they were before, however, and new rules seem to be the rule.
What does all of this mean for someone who wants to decide if this is the best time to borrow for a home? Wait for this time to pass and for rates to lower or grab a loan now, while there is still some credit around, or wait for the fallout from the recession?
Some economists are not only predicting a recession, but even a depression, with deflation instead of inflation. Deflation would mean much lower interest rates so anyone who is thinking about a purchase or refinancing at this stage would probably be better off to wait for conditions to improve in the world of interest rates.
Loans are still available. Many small lenders never had the capacity to delve into the giant home loan programs that many of the larger banks did. This was because many of them were too small to enter this highflying arena of subprime loans.
A second supporting argument for waiting is that housing prices continue to fall, with predictions of futher price cuts of as much as 35%, even after the 20 to 25% decreases already seen. Case-Schiller, a research organization that conducts such studies, reports that in some regions prices have fallen 25%, with national averages at 17%. If the scenario is set not only for decreased rates, but also for lower housing prices, it would seem smart to wait until more of the credit crisis fallout can be judged.
With credit conditions so por and so many foreclosures casting a pall over the mortgage industry, one would think that those candidates for mortgages with good credit histories would be able to name their rate when it comes to a mortgage. But it appears that banks are actually increasing rates, in the hope that will improve their revenue.
This seems like a bad business decision; normally a business will lower prices when business is bad so that they can get whatever business they can. Matters in the banking industry are far from normal, right now, and credit card companies are also using this strategy of higher rates to increase revenue in this tight market.
In the good old days, a slowdown in the economy would usually mean a lowering of interest rates since lenders would try to attract more customers with attractive rates. Matters are not like they were before, however, and new rules seem to be the rule.
What does all of this mean for someone who wants to decide if this is the best time to borrow for a home? Wait for this time to pass and for rates to lower or grab a loan now, while there is still some credit around, or wait for the fallout from the recession?
Some economists are not only predicting a recession, but even a depression, with deflation instead of inflation. Deflation would mean much lower interest rates so anyone who is thinking about a purchase or refinancing at this stage would probably be better off to wait for conditions to improve in the world of interest rates.
Loans are still available. Many small lenders never had the capacity to delve into the giant home loan programs that many of the larger banks did. This was because many of them were too small to enter this highflying arena of subprime loans.
A second supporting argument for waiting is that housing prices continue to fall, with predictions of futher price cuts of as much as 35%, even after the 20 to 25% decreases already seen. Case-Schiller, a research organization that conducts such studies, reports that in some regions prices have fallen 25%, with national averages at 17%. If the scenario is set not only for decreased rates, but also for lower housing prices, it would seem smart to wait until more of the credit crisis fallout can be judged.
About the Author:
Thank you for reading our article.You may be interested in alberta lowest mortgage rates or meilleur assurance pret hypotheque
