Home Mortgage Refinance Sub Prime Market Trends

Home Mortgage Refinance Sub Prime Market Trends



Home Mortgage Refinance: Sub Prime Market Trends
It’s been said time and again that the​ home mortgage refinance market has reached saturation point .​
The refinance bubble seems to​ be near bursting .​
Rising delinquencies,​ bankruptcies and foreclosures are making home mortgage refinance a​ less lucrative than before .​
Are you​ part of​ the​ sub-prime home mortgage refinance scenario? Then it’s time to​ take a​ good hard look at​ current trends.
Rising real estate costs
The real estate market has seen a​ steep rise in​ the​ price of​ houses - with the​ result that the​ average home buyer cannot afford to​ spend such a​ high sum on​ owning a​ new home .​
Even those persons who are making monthly payments towards the​ home mortgage refinance are finding it​ increasingly difficult to​ cope with rising prices .​
Interest rates have shot up,​ further tipping the​ scales against the​ homeowner’s favor.
Why the​ sudden rise?
There are many reasons why interest rates and associated real estate expenses have escalated .​
For starters,​ the​ sub prime market borrowers typically comprise those who have already been rejected as​ per other more stringent eligibility criteria in​ the​ prime market .​
This means the​ sub prime home mortgage refinance lenders offer them loans at​ relatively easier criteria – some of​ them may even imply lesser documentation and background checks on​ the​ borrower .​
Even those borrowers who have a​ relatively lower credit score maybe approved under the​ sub prime market home mortgage refinance lending process.
The real estate segment is​ hurting
Delinquencies and default patterns are at​ an​ all time high .​
Foreclosure and Real Estate Owned is​ a​ common phenomenon these days in​ the​ home mortgage refinance scenario .​
Why this is​ happening can be predominantly attributed to​ the​ re-adjustment in​ rates .​
Usually the​ sub prime home mortgage refinance lenders attract borrowers with a​ low promotional rate .​
When this rate shoots up after the​ promotional stage,​ it’s a​ nightmarish situation for borrowers and lenders .​
The borrower finds it​ impossible to​ pay up and the​ lender finds it​ virtually impossible to​ recover the​ money .​
This is​ also known as​ predatory lending – it’s quite similar to​ hunting for a​ prey by luring with attractive rates of​ interest .​
Once the​ unsuspecting customer has been caught in​ the​ web,​ there’s no escape and the​ home mortgage refinance lender extract every possible penny from the​ borrower .​
What this means from a​ long term perspective is​ that investors lose trust in​ the​ home mortgage refinance lending company .​
This can affect the​ prime market and potentially qualifying borrowers may not qualify in​ the​ prime market .​
This way home sales deteriorate and real estate suffers.
Growing competition
With the​ recent decline in​ home sales,​ most home mortgage refinance lenders are skeptical on​ future profit margins .​
They prefer to​ be less optimistic about the​ future trends in​ the​ sub prime market .​
However this has not stopped lenders from fiercely competing with each other .​
In fact,​ competition has now escalated because in​ the​ dwindling home mortgage refinance market,​ every lender wants to​ make a​ quick buck or​ two.




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