It’s an excellent idea to get a mortgage if you still have your job.
Although the interest rate for a mortgage is not at zero percent, the current rates for mortgages are extremely low. However a lot of lenders have tightened up the guidelines toward employment verification, credit scores and debt ratios.
It is a rather turbulent time right now for mortgage lenders.
The Federal Reserve has just purchased $250 billion worth of mortgage-backed securities in their attempt to try to strengthen the markets. However, that move has caused quite a bit of shock among lenders and unintended consequences.
Mortgage bankers, in regular times, hedge themselves against rising interest rates.
If the rates rise, the hedge ensures that they don’t lose too much money from people who locked in lower rates. Now that the Feds have spent $250 billion to help the market, compared to the $80 billion spent during the housing crisis, commercial mortgage lenders are at a serious risk. By flooding the market with money, they’ve forced down interest rates and blown up the hedge. Because of this, lenders are getting margin calls and are being forced to pay tens of millions of dollars to meet those margin calls. As a result, many companies are either on the brink of going under, or already have done so.
This isn’t the only problem in the market right now.
In the previous month, the demand for housing has dropped to almost zero, possibly mirroring the fact that about 3.3 million people went unemployed last week. For example, Zillow has completely suspended all purchases. Even with the promised $1,200 from the government, lenders fear some homeowners will still have a high likelihood defaulting on their mortgages.
What does this mean for borrowers?
It is more important than ever to communicate with a seasoned mortgage broker like myself to get quality up-to-date information. Call me today to see if I can help you into todays historically low mortgage rates.
