| THE SUBPRIME MORTGAGE IMPLOSION UNLOCKS DOORS TO CAREERS IN ...
Pleasant Grove, UT/March 28, 2007/FPSnewswire/ -- It's certainly not "business as usual" in the residential mortgage industry. For some time now, the pressure has been mounting in numerous ways. More brokers than ever are competing for fewer and fewer deals. Loan fees are getting squeezed. More and more borrowers are turning to online lenders who do loans very cheaply. And now, to put the icing on the cake, there's the subprime implosion. Because of secondary market pressure, the most aggressive loan programs are already beginning to disappear - and more will certainly follow. Underwriting guidelines are tightening. Because of this, the pool of borrowers that qualify for loans will continue to shrink even further. "One path that leads to increased income is the commercial mortgage business," says Joe Mardesich, president and CEO of Nationwide Commercial Funding, a national mortgage brokerage.
Ray Boulger: Nationwide's new 25 year fixed rate mortgage
“Nationwide's decision to launch a 25 year fixed rate provides a welcome addition to the choices available for borrowers looking for long term security. However, 25 year swap rates have increased by around 0.4% over the last 4 months and the cost of funds now fully reflects the expectation of one further increase of 0.25% in Bank Rate to 5.5%. After the 8 – 1 vote for no change, with one vote for a cut, at the March meeting of the Monetary Policy Committee it looks increasingly likely that rates are close to their peak for this interest rate cycle. Therefore borrowers looking for long term security need to consider carefully whether now is the right time to lock into a long term fix. For example, as recently as January of this year Kent Reliance Building Society were offering a 25 year fixed rate at 4.98%.
Mortgage rates will fall, experts
Many experts contend mortgage interest rates, still near their historic lows, will fall as much as 1% within the next year. Mortgage rates are generally tied to bond market yields which, in turn, are tied to the overnight lending rates that central banks such as the Bank of Canada and the U.S. Federal Reserve charge their best clients, such as major banks. "The single most important thing ... is the U.S. short-term interest rate, determined by the Federal Reserve," says Brad Willock, senior portfolio manager with RBC Asset Management Inc. Central bank rates in North America were near 20% in the early 1980s, then fell in the wake of terrorist attacks in 2001, to 1% in the United States and 2% in Canada. Overnight rates crept up until June, 2006, remaining on hold since then at 5.25% in the United States and 4.25% in Canada.
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