Mortgage and Real Estate Blog

With all of this talk of boom and bust, you might think it’s hard to know who to trust. One agent speaks of the coming boom while another sees nothing but gloom. The mortgage industry gets a shakeup and half of the brokers run for cover. The other half just cover up their past. What gives?

Predictions are rarely accurate. Whether the prediction are real estate, mortgage and interest rates, or international banking, you are sure to find someone who can back up their optimistic claims of hurray, hurray or their pessimism with cold, hard facts. That’s why it’s important to study for yourself and get your own ideas based on experience, study of the issues, and a well-rounded bit of knowledge from multiple sources. Sure, there are people you can trust - in the real estate industry, the mortgage industry, and elsewhere. But even the people you trust can be wrong.

The U.S. dollar has declined in value relative to the Euro. This is an obvious reaction to the recent troubles hitting the banking and mortgage market.

Speculators are saying that Fannie Mae and Freddie Mac could be in trouble and with the recent failure of IndyMac, the largest bank failure in history, it doesn’t look good for U.S. financial markets. Who is to blame isn’t the concern, but what can investors do about it is.

When it comes to forex investing, currency investors might be better off looking overseas. Will the dollar climb back up? It can, but it might be a few years before that happens.

The mortgage industry has seen its first casualty in a long while. IndyMac Bancorp has been taken over by the Feds, which is now being called the largest bank failure in history. That’s quite a statement considering that there were some big boys who went belly up in the S&L crisis in the 1980s.

The entire mortgage industry has been weebling and wobbling for a year now. IndyMac’s demise ranks as the first bank failure since the current crisis got under way. Does that mean more are to follow? I think it almost certainly does mean that and I look at the Fed taking more steps to curtail this crisis, though I doubt that more bank closures can be averted. It looks like the banking and mortgage industry is on another down swing, and if that happens then the entire economy will swing down.

(Source) Barclays, the seventh-biggest mortgage lender, said that, from today, it was increasing its rates for landlords by up to 0.5 per cent and for homebuyers and remortgagers by up to 0.3 per cent. Abbey and Bradford & Bingley increased their rates last week.

Does this mean that other mortgage lenders will follow? Will there be a ripple in rising lending rates as mortgage lenders across the country begin to raise their rates for landlords and home buyers.

If we do see further increases in lending rates then that could result in fewer housing transactions overall as rising fuel prices will discourage spending and taking on new debt. Home buyers will stop buying homes and landlords will stop offering new rentals. This could affect both the home sales market and the rental market, which doesn’t happen often.

I’d be on the look out for rising lending rates among all the nation’s mortgage companies soon, and if things continue to move in that direction then local housing prices may continue to fall as well.

Falling home prices and rising interest rates will not do much to make people optimistic about the economy.

Forbes reports:

WASHINGTON (Thomson Financial) - The Federal Reserve Board has approved Bank of America’s takeover of mortgage lender Countrywide Financial and its subsidiary Countrywide Bank.

This is an interesting buyout because it means that Bank of America will now be the largest mortgage lender in the country, but it also means that the purchase has passed the Fed’s antitrust muster. Many people in the industry are upset by the purchase, however, and there could be lawsuits to follow if other mortgage lenders want to press the antitrust issue. I doubt that any of them will hold water, however.

I think this is an important development for the industry, though. I see other buyouts and mergers on the horizon. We could end up with another S&L type scenario similar to the one that happened in the 1980s under Reagan. If so then you’ll see more buyouts, mergers, and belly ups, and possibly even some convictions. I’m thinking this is just the beginning of a several year down slide for financial institutions.