Rise in Mortgage Applications along with Low Mortgage Rates Could Cause Lending Crisis
Posted on | April 12, 2009 | 3 Comments
For quite some time, I have made the observation that the increasing amount of mortgage applications could cause a lending crisis. With the Obama Mortgage Plan in full swing, the number of mortgage applications has greatly increased during the months of March and April. While many of these applications are getting turned away due to the lower than expect appraisal value, there are still many applications that are being approved. If this continues at a high rate, we could see a lending crisis.
We all know that many banks and mortgage lenders are in horrible financial condition. Now the government is forced them to lend at extremely low rates which is pushing people through their doors. The problem is that many of these lenders are not ready for the influx of mortgage applications. I honestly feel that we will start to see mortgage rates go higher due to the fact that lenders cannot keep up with the applications.
Not only are lenders struggling to go through all the applications, they are also struggling to fund many of these mortgage loans. Almost every financially sound home owner in America has a desire to refinance at these low rates. If only 1/5 of America does go through the mortgage application process, lenders are going to find it VERY difficult to fund these mortgage loans. The only way to solve this issue is for lenders to turn away borrowers who are not elite. If there is a second thought by the lender, it is likely the borrower will not get financed.
The next few months should be extremely interesting in the housing market, but I still do not see a bottom any time soon as the unemployment rate and new housing supply continue to rise.
Tags: appraisal value > housing supply > mortgage applications > mortgage loans
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April 12th, 2009 @ 5:06 pm
[...] News Sources wrote an interesting post today onHere’s a quick excerptFor quite some time, I have made the observation that the increasing amount of mortgage applications could cause a lending crisis. With the Obama Mortgage Plan in full swing, the number of mortgage applications has greatly increased during the months of March and April. While many of these applications are getting turned away due to the lower than expect appraisal value, there are still many applications that are being approved. If this continues at a high rate, we could see a lending crisis. [...]
April 12th, 2009 @ 6:07 pm
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April 13th, 2009 @ 4:29 am
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