Posts tagged with Mortgage Market

Want to remortgage but are worried about your personal data?

  • Posted on March 21, 2011 at 11:26 am

Want to remortgage but are worried about your personal data?

The recent scandal where the personal data of 25 million people went missing is worrying. Lots of companies today want your personal details and very often they dont need them and shouldnt be asking for them.

This is more common in the mortgage market than almost anywhere else. www.mform.co.ukMortgage comparison sites ask you to provide your phone number so that a broker can call you back. Whats more concerning is that often you wont know which company is going to call you back because the website you were using has sold your details to another company (usually the highest bidder) and even they dont know who they have sold them to!

However there are sites that do things properly. A good example of this was quoted recently when a website user said Found this site very useful and easy to use. It gave me the information I needed without having lots of people keep contacting me by telephone.
I work full-time during the day and also have a part-time evening job so finding time to take ‘information gathering’ telephone calls was not what I wanted but it was amazing how many sites say that it is online and then when you have submitted the form then say ’someone will contact you’ and do not provide any useful information online.

If you are concerned about your personal data and dont want to be called by someone you dont know, then make sure that you use a real mortgage comparison site one that actually compares the whole of the mortgage market and lets you apply for the mortgage there and then.
Be wary of sites that are actually just there to make money by selling your details to a broker. You should be able to get a personalised illustration without giving your contact details.

Get the right site and not only will your data be secure but you will improve your chance of finding the right deal for your www.mform.co.ukmformmform?contentKey=mortgageinformationbuyertypesReMortgaging.xmlremortgage.

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Mortgage Crisis Giving more Woes to the Economy

  • Posted on January 3, 2011 at 11:26 am

The economic scenario seems to be getting worse as the financial sector continuously reporting huge losses from exposure to the mortgage market. Even the residential sector, the commercial real estate sector, and sectors like credit cards, auto loans are moving to a negative territory and are quite at risk.

However, default mortgage rates this year have already shaken the financial sector. And now it is expected that millions of adjustable rate mortgages will reset, giving higher interest rates (according to the new loan agreement), which is just impossible for the homeowners to pay. But the homeowners, who are having 600 billion of subprime adjustable rate mortgage loans that is the ARM, are about to reset at higher amounts during the next eight months. Its not all the mortgages that are in trouble but homeowners who default or fall behind on the payments are a problem.

Now the situation is such that this mortgage crisis is forcing people to get out of their homes, besides hampering the economy as a whole. It is expected that the housing slump may get worse by more empty homes in the market, causing prices to plunge by up to 40% in real estate spots, such as California, Florida, and Nevada.

According to a recent report by the Goldman Sachs, the estimated industry wide losses from declines in the market value of subprime mortgage related collateralized debt obligation, to be almost 150 billion. Moreover, the third quarter write-off settled down at 18 billion from the financial firms but some firms indicated that the write-off in the fourth quarter would come to 22 billion. However, the losses could even hit 300 billion, as estimated by the Organization for Economic Cooperation and Development.

This worse situation of the housing sector is resulting into bigger problems, that is the unemployment and the higher consumer losses. It is estimated that almost 100,000 financial services jobs related to the credit and lending have already been lost, from local bank loan officers to traders dealing in mortgage backed securities. And moreover, this kind of countless job losses would curtail consumer spending that makes up two-thirds of the economy. However, thousands of workers of the housing industry could loss their job and it is expected that this would affect the car dealers, retailers and other dependent on the consumer paychecks badly.

Other indication shows that borrowers who took out loans in the first six months of this year are already falling behind on their payments as compared to the borrowers who took out loans last year. And this is making it harder for would be buyers to get new mortgages. This is infact, is a frightening indication for the homebuilders with projects going begging on the market, and also for the homeowners desperate to unload property to avoid default on their loans.

Besides these sectors, there is one more vital sector that is foreclosure. The number of homes in foreclosure is expected to move high after more than doubling during the third quarter as compared to year earlier, to 446,726 homes nationwide. This is one foreclosure filing for every 196 households in the nation, a 34% jump from three months earlier.

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Capital Markets driving the cost of Mortgages

  • Posted on June 28, 2010 at 11:26 am

The capital that makes up your mortgage loan can come from a number of sources including other people’s deposits and savings, stored up in the bank and other investors, all of which make up the Capital Markets. Of course, there isn’t enough cash in the general consumers accounts to make up the capital needed for the mortgage markets so the majority comes from investors looking to buy debt instruments, which in this case are bonds.

The buyers of these bonds are looking for a good return on their investments, which is of course completely opposite to people looking for a low rate mortgage. In effect, you’re borrowing money from an investor at a given rate (for you an interest rate and for the investor a rate of return). Of course, the investor is only willing to invest a certain amount of capital in such low yield bonds.

Now, the rates on a mortgage fluctuate from month to month and this rate is determined by how well ‘mortgage bonds’ are selling. A rise in sales will see a drop in yield and a drop in sales will see a rise in yield, thus attracting investors back into the market. The result of the average mortgage holder will be the opposite though. When investors leave the bond market, they will see a rise in mortgage interest rates.

Of course, the mortgage market is driven by a number of external factors, such as supply and demand but the greatest factors is that of inflation. Where inflation is low, the return for the investor is high, but when inflation increases, it devalues the investment and at the same time the mortgage. Suddenly a 120,000 mortgage can seem far less of a burden.

Inflation is kept under control by raising or lowering interest rates. When inflation is rampant, interest rates are raised, resulting in a rise in mortgage repayments.

Recent sub-prime mortgage lending issues in the US have had a knock on effect throughout the world. Billions of US pounds have been lost, simply because many of the associated bonds were bundled up and sold on to banks throughout the world. These mortgages were in effect over-subscribed in the states, with many people only able to afford a house with one of them. Unfortunately, the mortgages were being defaulted on and, having been sold on to UK, Hong Kong, German, French banks, they could not be easily recouped. The collapse in this market left many banks in serious problems. Losses could not be recouped and the bond market dried up as investors fled. New mortgages became difficult to find and their rates were much higher than previous. Interest rates have now been dropped so as to stimulate the market. Lenders have maintained bond rates at a higher level, giving them greater yield and the result will be a higher return for what is now percieved a greater risk.

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Adjustable Rate Mortgages vs. Fixed Rate Mortgages

  • Posted on May 17, 2010 at 11:26 am

Buying a home can be an exciting and stressful time for anyone. While you may be excited at the prospect of owning your own home, especially if it is your first home purchase, the idea of choosing between all of the many different types of mortgages may leave you feeling confused and apprehensive.

Two of the most common choices youll find in the mortgage market are adjustable rate mortgages and fixed rate mortgages. Fixed rate mortgages are the most traditional type of home mortgage, offering a fixed interest rate that does not change throughout the life of your loan. There are a number of important advantages associated with this type of mortgage. First, if you are budget conscious, this type of mortgage will give you the peace of mind in knowing that your monthly mortgage amount will not change. You can budget the remainder of your financial obligations without worrying about a changing mortgage payment to throw things off.

An adjustable rate mortgage works differently. With this type of mortgage you may be able to obtain a lower interest rate than would normally be available with a fixed rate mortgage; however, the interest rate is not fixed. This means that your monthly mortgage rate may change as interest rates change. With such a mortgage you may not be able to regularly plan your budget due to such fluctuations. While there is usually a cap that will keep the interest rate from fluctuating too much, even a little fluctuation can be too much for some homeowners. Of course, there is also the possibility that interest rates will drop and if that is the case, because your mortgage is adjustable, your monthly payments will drop right along with the interest rate.

When deciding whether a fixed rate or adjustable rate mortgage is your best choice, you need to give thought to several factors. Ask yourself whether it is more important to be able to plan your monthly budget without wondering whether your mortgage will fluctuate or whether you would prefer to receive a lower interest rate in the beginning of your mortgage.

Remember that if you decide you would like to obtain the advantages of both you do have other options available to you. For example, if you feel the interest rate offered to you on a fixed rate mortgage is too high but you want the security of not having to worry about a fluctuating interest rate you can always buy down your interest rate by purchasing points. This will mean more up front costs for your mortgage; however, it may be worth it to decrease the interest rate, especially if interest rates are currently high.

If you do elect to go with an adjustable rate mortgage make sure you understand exactly how high the rates may go as well as ensure you have enough wiggle room in your monthly budget to cushion increases if they occur. This may help to keep you out of a tight spot and possibly losing your home due to rising interest rates.

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