Lower rates may not create a surge in mortgage activity - because the banks have cut too much staff!!

[w¡n9Nµ7 §£@¥€r 123]

US banks are having trouble handling a surge of mortgage applications spurred by dramatically lower interest rates, after record loan defaults and thousands of job cuts have stretched mortgage industry resources to the limit.

Applications for home loans more than doubled in the two weeks after the Federal Reserve said it would buy mortgage bonds to help stabilise the market, prompting mortgage rates to fall by more than three-quarters of a percentage point.

...

"The mortgage industry is collectively unprepared to deal with a cascade of business; staffs were pared to the bone as the market for mortgages shrank over the past year," analysts at HSH Associates wrote in a note to clients.

Mahesh Swaminathan, mortgage analyst at Credit Suisse, said that as a result, lower rates would not necessarily create a wave of mortgage refinancing on the scale that was seen in 2003, when credit markets were healthy.

http://www.ft.com/cms/s/0/66961434-d05b-11...0077b07658.html

[chri'stina 190]

Well, are they going to hire more people? I am sure you could find an article about that too.

[w¡n9Nµ7 §£@¥€r 123]

I am sure you could find an article about that too.

[spookyturtle 9,466]

Maybe they can't find the bailout money so they can't lend it.

[chri'stina 190]

I am sure you could find an article about that too.

Well...its true! Now go find one!

[rebeccajo 14]

Oh hogwash.

I was in the mortgage industry in the mid 80's when rates dipped below double-digits for the first time in many years. Everybody in the country was refinancing - and I'm not kidding. Mortgage companies were SWAMPED - I know because I managed one. Many, like the firm I worked in, were small firms with little or no automation. Lending was also quite different then in that we verified EVERYTHING - employment, assets, etc - by written request that had to be returned to us by banks, employers, etc.

We managed to get the job done. Some of us were working practically 24/7 for months on end, but the job got done.

[natty bumppo 297]

Well, are they going to hire more people? I am sure you could find an article about that too.

yea ... illegals ...

[Ban Hammer 14,583]

I am sure you could find an article about that too.

[zqt3344 21]

It is like trying to push a string. No one is going to lend until the TED spread gets down to 1% or less. It is going to be a long cold winter and next year is going to be a slow slow slow year, more layoffs and reductions are coming and more credit tightening is coming. And just think all those rip off mortgage companies and the rest of their buddies that made all those loans in 05, 06, 07 are now coming due in future of 09 and 10 for resets on the interest rates and principal payments.

US banks are having trouble handling a surge of mortgage applications spurred by dramatically lower interest rates, after record loan defaults and thousands of job cuts have stretched mortgage industry resources to the limit.

Applications for home loans more than doubled in the two weeks after the Federal Reserve said it would buy mortgage bonds to help stabilise the market, prompting mortgage rates to fall by more than three-quarters of a percentage point.

...

"The mortgage industry is collectively unprepared to deal with a cascade of business; staffs were pared to the bone as the market for mortgages shrank over the past year," analysts at HSH Associates wrote in a note to clients.

Mahesh Swaminathan, mortgage analyst at Credit Suisse, said that as a result, lower rates would not necessarily create a wave of mortgage refinancing on the scale that was seen in 2003, when credit markets were healthy.

http://www.ft.com/cms/s/0/66961434-d05b-11...0077b07658.html

[w¡n9Nµ7 §£@¥€r 123]

Edited December 23, 2008 by A.J.

[zqt3344 21]

And look at all the ARMs coming due in 11! Makes for a very bad time coming.

[w¡n9Nµ7 §£@¥€r 123]

yup

Edited December 23, 2008 by A.J.

[zqt3344 21]

Kudos AJ, that was a very good post, very accurate and hopefully many on here will take the time to see it and look at your chart, for it tells the truth of this situation we are in and fast approaching.

yup

[w¡n9Nµ7 §£@¥€r 123]

That chart has been posted on VJ many times before.

[zqt3344 21]

Well keep it on there, it will open a lot of people's eyes, and let them see we are only just getting into the start of this recession. Sad but true.

That chart has been posted on VJ many times before.