Mortagerates asked:


Trends On The American Mortgage Market

Most recently, Freddie Mac, second biggest and influential funder of American mortgage loans announced that its current agreement to purchase various mortgages gradually reached its highest level after the specialized USA regulator eased most capital limitations. This significant diminution of the constraining measures is executed as a final attempt to provide further stability to the continuously worsening American real estate markets by increasing total purchasing power of both government sponsored enterprises by extra $200 billion.

A bit later Freddie Mac entered several new contracts to buy loans worth $43,5 billion, suddenly increasing compared with only $14,8 billion for the previous month. Finally total portfolio of this leading financial company as well increased to $712,5 billion. In the similar way, at common annualized rate, total home mortgage investing assets has increased up to remarkable 9,9%. Despite all these unquestionable positives, unfortunately, general delinquency rate as well rose up to 0,74 percent of the loans.

Similarly, current rates on 30-year mortgages climbed up to 6 percent for the first time in 6 weeks, because of the increasing ubiquitous anxiety of the financial markets about quickly rising inflation pressures. In this reason, it will be exceptionally reasonable for you to consider in advance that most popular 30-year fixed mortgage rates currently seem quite steady on ordinary market levels of about 6,03 percent. However, these rates still remain extremely below their common year-ago levels, when 30-year mortgage rates easily averaged 6,16 percent, 15-year mortgages - 5,87 percent and 1 year ARM - 5,43 percent. Other disturbing news on the global market basically include that most frequently searched interest rates for fixed-rate mortgages rise, while actual prices for 1-year adjustable-rate mortgages continuously decrease. As a consequnce from this general decline, the total volume of applications goes down to 3,2%, in comparison with 2007.



Angela

Gregory van Duyse asked:


There are three different kinds of mortgage loan consultants:

• The representative of the local bank branch: This consultant only offers loans, and he has other banking duties to attend to. They receive a salary from the bank they work for, and perhaps a bonus.

The local bank branch representative acts just like a mortgage consultant, but he is the only one who can actually submit a home loan application. Things have changed in the mortgage world, and now almost all of the lenders market their mortgages through brokers or sometimes through mortgage marketers - taux hypothecaire. Bank representatives still offer mortgage loans in addition to other financial products, but only for the bank they work for.

• The mortgage marketer: He only deals with loans, with a specialty in mortgage loans. He is compensated by the bank that he originates the loans for.

A recent trend is for banks to hire local reps in order to give better service to the client. A mortgage marketer (taux hypothecaire) will go to the client, but he works for the bank that hires him. He is paid a commission on the amount of the loans he generates.

• The mortgage broker: The broker can offer the loan products of many lenders. He specializes in mortgages and works for commission, which is paid by whatever lender takes the loan.

Mortgage brokers have been in business for a while (thirty years) but have only in recent times become an important factor in the mortgage market. A mortgage broker will work with many lenders (thirty or more) and can deal with any one of them to find the best deal for a borrower - taux hypothecaire. There are more than 12,000 mortgage brokers in Canada, and they represent 27% of the mortgage market).

(NB: I try to be neutral on this issue, but since I am a mortgage broker, I want to let you know that I believe that a mortgage broker is the best person to deal with for a mortgage - taux hypothecaire. Otherwise, I would have chosen one of the other fields!

One thing is certain. It is the expertise and integrity of the consultant that will make the difference. There are excellent local bank branch representatives, excellent mortgage marketers and excellent mortgage brokers. However, the opposite can also be true.

The service of the individual with whom you will work is most important.

One thing is certain. It is the expertise and integrity of the advisor that will make the difference - taux hypothecaire. There are excellent local bank branch representatives, excellent mortgage marketers and excellent mortgage brokers. However, the opposite can also be true.

The service of the individual with whom you will work is most important.

Mortgage brokering has become more popular

A survey by the CMHC showed that in 2004 more than 26% of mortgage loans were financed with the help of a mortgage broker (taux hypothecaire). No matter what, it is the individual, his integrity and his expertise that will make the difference.



Natalie

The Global Property Guide asked:


Almost a decade after the Asian crisis, the mortgage markets of several Asian countries are in much better shape and are poised for expansion.

Increases in capital, the consolidation of banks, and increases in foreign ownership and participation are spurring growth, according to a report released by the Global Property Guide.

(Research available from this link)

The decline of state ownership of banks and the shift of government housing agencies to mortgage market “enabler” instead of direct providers of mortgage loans have paved the way for the expansion of the private sector. Most countries have also started to offer mortgage default insurance for lenders

Asia’s property markets are now growing and banks are more willing to extend mortgage loans around the region. The positive benefits could include stronger house-price growth - and more investment in housing.

While property prices in much of the developed world are currently at historic peaks, property prices in most Asian countries are well below peak levels. Asia’s housing markets have lagged for three main reasons:

1. The Asian Crisis caused a long period of high interest rates. Potential property purchasers did not want borrow at the interest rates being offered.

2. Post-crisis bank portfolios were full of defaulted property loans. Banks were, till recently, often reluctant to lend.

3. Poor credit information, weak legal systems, lack of transparency, high revenue extraction by governments (transfer taxes, registration fees) have raised the costs of housing investment in many Asian countries.

Mortgage markets in Asian countries are also relatively small, particularly Indonesia (2% of GDP), China (10%), Philippines (12%) and Thailand (16%). Only Singapore and Hong Kong have mortgage markets generally at par with most developed countries, with mortgage debt at 61% and 48% of GDP, respectively. Even OECD member countries Japan and South Korea have relatively small mortgage markets, given their level of economic development.

“The small size of Asia’s mortgage markets means there is huge potential for growth,” says Prince Cruz, senior economist of the Global Property Guide.

“For instance, if China’s mortgage market were to increase to 20% of GDP in 2010, the market will be worth more than US$700 billion. Given the strong growth of China’s mortgage market and economy, this scenario is not unlikely,” says Cruz.

Despite the recent interest rate hikes since, mortgage rates are still affordable in most of Asia, below 8%. This should turn the adjustable rate mortgage (ARM) structure typical of Asian loans into an advantage, making borrowing comparatively inexpensive.

In some Asian countries, the long period during which loans were effectively unavailable means that supply is low, and rents are relatively high, leading to good rental investment returns for investors - as in Indonesia, Thailand, and the Philippines.

The result could be a virtuous circle.

Low interest rates will foster an active mortgage market, aided by pent-up housing demand, which in turn will boost economic activity. A vibrant economy is good for the housing market.

Healthy mortgage markets are a critical factor in the growth of housing markets. With Asia’s mortgage markets now in better condition, the stage is set for further reforms which will provide the financial underpinning for better housing financing, more attractive pricing, more varied product offerings, and generally, the provision of more housing at lower cost to Asia’s citizens.

Economics Team:

Prince Christian Cruz, Senior Economist

Phone: (+632) 750 0560

Cell: (+63) 917 735 2228

Fax: (+632) 325 0642

Email: prince@globalpropertyguide.com

Publisher and Editor:

Matthew Montagu-Pollock,

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Address:

Global Property Guide

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.com



Carolyn