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Surge of Re-Fi's

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Surge of Re-Fi's

Unread postby InToWishin » Thu 25 Dec 2008, 08:02:48

$this->bbcode_second_pass_quote('', '[')u]Mortgage applications soar 48% - rates fall

Spike in refinancing following Fed moves leads to nearly 50% jump in Mortgage Bankers' index; home purchases also up.

Last Updated: December 24, 2008: 10:42 AM ET

NEW YORK (CNNMoney.com) -- Near record low mortgage rates sent mortgage applications shooting higher last week, especially for refinances, according to an industry report.

The Mortgage Bankers Association reported that its overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.

That was driven by a 62.6% leap in the group's Refinance Index. But the Conventional Purchase Index also increased 17.7%. The only component of the overall index to fall was the Government Purchase Index, which largely tracks FHA loans. It slipped 3.4%

...skip...

The report comes a day after the National Association of Realtors reported the number of existing homes sold during November plummeted 8.6% as prices plunged by record amounts. New home sales were also lower, according to a government report. And housing starts and building permits now stand at record low levels.


I'm guessing that high levels of re-fi and low levels of new mortgages (low home sale turnover and low new home sales) is due to the banks trusting customers that already have mortgages but not first time buyers.

$this->bbcode_second_pass_quote('', '[')u]Fewer mortgages for first-time buyers

Dutch news

Published: Monday 22 December 2008 09:33 UTC
Last updated: Monday 22 December 2008 09:33 UTC

The national organisation of mortgage advisors says the financial crisis is pushing banks only to provide mortgages with the lowest possible risk. The organisation, Nationale Hypotheekpas (NHP), warns this will make it much harder for first-time home buyers without savings to get a mortgage.

...snip...


$this->bbcode_second_pass_quote('', '[')u]HSBC mortgage boast won't help first-time buyers
Telegraph UK

By Kara Gammell
Last Updated: 4:28PM GMT 08 Dec 2008

The UK's largest bank has said that it will lend up to £15bn in mortgages in 2009 – a 20pc increase on this year. But despite being one of Britain's main high street banks, it is not one of the biggest lenders, having just a 4pc market share.

Mortgage brokers welcomed the move but said it would not boost the first-time buyer market and it would help only borrowers looking to remortgage who have a decent chunk of equity in their home.

...snip...


$this->bbcode_second_pass_quote('', '[')u]California home loan program suspended
mercurynews.com
By Eve Mitchell, STAFF WRITER
Posted: 12/23/2008 04:06:31 PM PST

It has got even harder for low- and moderate-income first-time home buyers to find an affordable loan, thanks to the state's budget problems. The California Housing Finance Agency has temporarily suspended popular programs that help people get into homes through 30-year, fixed-rate loans and down payment help.

...snip...


Lower interest (for the moment) and fewer new mortgages--what is all this going to do to the banks?
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Re: Surge of Re-Fi's

Unread postby 3aidlillahi » Thu 25 Dec 2008, 08:34:57

$this->bbcode_second_pass_quote('', 'L')ower interest (for the moment) and fewer new mortgages--what is all this going to do to the banks?


Hopefully, it will decrease the number of foreclosures and thus keep up a steady flow of money to banks. Then they build up their balance sheets enough so that they can lend in greater numbers again, thus stimulating the economy and generating more revenue.

Would you rather have a million monthly payments at $1000 a month on average of 500,000 mortgages at $1500 a month? Banks can survive just fine with a lower intake as long as it is steady and coming from as many sources (mortgages) as possible.

Remember, banks don't really produce anything. They just charge you for using your money to generate 10 times as much money to lend back to you at interest. It really seems criminal when you think about it.
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Re: Surge of Re-Fi's

Unread postby TreeFarmer » Thu 25 Dec 2008, 08:49:54

What it does is let all the people with sound financial plans (i.e. those who know how to manage money) lock in low interest rates.

It also locks the bank in to having loaned money at a low rate, which the bank is either stuck with or resells. If the banks are unable to resell these mortages it will mean TROUBLE later.

When the inflation comes that is surely coming thanks to all this stimulus, the bank will find that it has loaned money cheaply but now has to pay higher interest rates to get deposits. There is a reason the GOVERNMENT came up with the ARM! It was to protect the banks, the same banks that now may be hanging themselves out to dry.

More later, its Christmas and the kids just got up!

TF
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Re: Surge of Re-Fi's

Unread postby Jotapay » Thu 25 Dec 2008, 11:44:37

$this->bbcode_second_pass_quote('3aidlillahi', '')$this->bbcode_second_pass_quote('', 'L')ower interest (for the moment) and fewer new mortgages--what is all this going to do to the banks?


Hopefully, it will decrease the number of foreclosures and thus keep up a steady flow of money to banks. Then they build up their balance sheets enough so that they can lend in greater numbers again, thus stimulating the economy and generating more revenue.


People who default could never afford the terms of a 30-year fixed rate mortgage anyway. It may help some, but not significantly in my estimation.
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Re: Surge of Re-Fi's

Unread postby 3aidlillahi » Thu 25 Dec 2008, 11:50:33

$this->bbcode_second_pass_quote('Jotapay', '')$this->bbcode_second_pass_quote('3aidlillahi', '')$this->bbcode_second_pass_quote('', 'L')ower interest (for the moment) and fewer new mortgages--what is all this going to do to the banks?


Hopefully, it will decrease the number of foreclosures and thus keep up a steady flow of money to banks. Then they build up their balance sheets enough so that they can lend in greater numbers again, thus stimulating the economy and generating more revenue.


People who default could never afford the terms of a 30-year fixed rate mortgage anyway. It may help some, but not significantly in my estimation.


Yeah. I have my doubts about it working but they have to try something, right? It's the equivalent to dumping water that breached a ship with ice buckets. You'll need a bigger bucket to get anything done.

But if this is coupled with government based programs to lend money to people, or more likely just give them money out of nothing, then it could work to a greater extent, allowing more people to pay off their reduced payments.

Banks wouldn't do something unless they thought they could make tons of money in the process.
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