Lenders Cushion Loan Pricing After Spike in Refinance Demand
August 20, 2010 by admin
Filed under Positive Real Estate
- Image by wallyg via Flickr
Los Angeles, Calif. (VOCUS)
The Mortgage Bankers Association (MBA) released its results to its Weekly Survey. This survey covers over 50% of all U.S. residential mortgage loan applications taken by retail mortgage bankers, commercial banks, and thrifts. This extremely accurate data gives economists a great look into the consumer demand for mortgage loans. This trend of increasing refinance applications implies consumers are seeking out a lower monthly payment, a fairly predictable assessment. But, the long term effects of this action paint a better picture.
If these consumers are actually able to reduce their monthly mortgage payments they will increase their disposable income, or their “spending money”, giving them the opportunity to spend that spending money which would in turn revitalize the economy. This would create more consumer spending or even allow debtors to pay down personal liabilities like credit cards. This effect could spiral to astronomical proportions because as the more people spend their surplus disposable income, the better the economy gets and the lower the mortgage payments are, creating the effect all over again.
