Mortgage Rate News

When the subprime mortgage crash of last year triggered a series of events that led to the current slowing economy, many economists were united in saying that things were looking dire. Now that a year has passed, though, there are divisions appearing with regard to how much longer the economy will be in a funk, as well as what is likely to cause continuing problems in the economy.

Is the economic downturn almost over?

The subprime mortgage crash triggered a credit market crash that triggered an economic downturn (no one has officially called it a “recession” yet). Now, some economists are saying that the economic downturn is nearly over, and that, as we enter the second half of the year, things are on the road to recovery for the economy. Indeed, some say that while it will take some time to get over the recent downturn, the worst is over and that recovery is inevitable from here. Some economists believe that a nearly-full recovery may be seen by early 2009.

Or is there more economic downturn trouble ahead?

Other economists, though, are not so sanguine about recovery from the economic downturn. They point to mounting unemployment and rising prices for energy and food. Even though oil prices are down today, the overall trend is still higher, and food prices inflation continues mostly unabated. These higher prices, some economists contend, will only hinder the economy heading into the immediate future.

Here is what Mortgage New Daily reports about some economists’ outlook for the economic downturn:

While there is pressure for the Fed to combat inflation, the central bank remains constrained not only by broad-based, anemic growth, but by the fact that soaring energy prices are caused by increased global demand rather than by U.S. consumers.

Which outlook do you agree with? Is the economic downturn almost over? Or is it just beginning?

Tags: economists, economic downturn, home mortgage loan, mortgage loan blog,
mortgage, mortgage news, subprime mortgage crash

Starting today, Banks.com is offering mortgage interest rates and quotes from around the country. It is possible to compare mortgage interest rates in your state, and from different lenders. This is a great tool that can help you better shop for the best home mortgage loan for you.

Why mortgage interest rates matter

Interest is money you pay for the privilege of borrowing money. You pay a fee to the lender in order to borrow the money. Your interest rate is expressed as a yearly percentage of the principal. The higher your interest rate, the more you pay in interest charges. To illustrate with a simple example:

You borrow $10,000 for a year at a rate of 7%. Your total repayment is $10,000 + (0.07 x 10,000 = $700) = $10,700. If you have an interest rate of 9.5% on that same loan, your repayment total is higher: $10,000 + (0.095 x 10,000 =$950) = $10,950. The difference in one year, for a 2.5 point difference, is $250.

You can imagine what a difference mortgage interest rates make, since they are spread out over 30 years. In the simplest terms, that’s like a savings of $7,500 for our example (if you paid interest on $10,000 each year for 30 years). With a house, mortgage interest rates can mean savings of tens of thousands of dollars over the life of the home loan.

Comparing mortgage interest rates

The rates listed at rates.banks.com are the best rates — what you could get with the best credit. But they do provide a useful ballpark comparison for mortgage lenders in your area. It gives you something to go on. When you actually talk to a home loan representative, make sure that you let him or her know your most current credit scores, and how much income you have. This will help in terms of narrowing down what sort of mortgage interest rates you can get.

Tags: home loan, mortgage interest rates, home mortgage loan, mortgage loan blog,
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Today is a big day for financial type news. It usually is at the end/beginning of a month. Today’s news has to do with downgrades on Alt-A loans and an expected interest rate cut from the Federal Reserve.

Downgrades for Alt-A mortgage back securities

S&P regularly rates different investments. And one of those types of investments in mortgage back securities. And many mortgage backed securities are getting downgrades today — mainly because many of them contain Alt-A loans.

Alt-A loans are those loans given to people with not so great credit. In these cases, the person does not qualify for prime mortgage terms, notably the prime interest rate being offered. So, instead, these types of borrowers are offered Alt-A loans.

These Alt-A loans feature higher interest rates than the prime home mortgage loans offered to those with better credit ratings. Sound familiar? It should. These Alt-A loans are basically subprime mortgages. It’s no surprise that mortgage backed securities containing Alt-A loans are being downgraded — to the tune of about $41 billion.

Interest rate cut

Today’s expected interest rate cut is big news in the financial markets, but it may not have a big effect on mortgage rates. After all, mortgage rates are figured on a more long-term basis than the Fed funds rate. However, there may be a slight effect.

More likely to affect mortgage rates and sentiment on the mortgage market is the rhetoric — whatever it may be — that accompanies the rate decision. Many expect to hear that the need for monetary easing may be over, and that further interest rate cut decisions may not be needed in the near future.

Lots of interesting things are happening right now on the mortgage market, and you would do well to pay attention.

Tags: mortgage loan blog, Alt-A loans, home mortgage loans, subprime mortgages,
mortgage market, mortgage market news, interest rate decision