Home Mortgage Refinance: Sub Prime Market Trends

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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 =96 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 =96 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.

About The Author: For complete and holistic information on this
topic, consult the experts at Home Mortgage Refinance Rate
http://www.homemortgageloan-refinance.com. There’s no better
place to find out what you need to do. A simple click will get
you ready answers! Do it now.

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