That would reduce demand for mortgage paper, in addition to embedding a risk premium in the rate for those investors still willing to take the gamble.
Investor demand for mortgage-backed securities--and banks' eagerness to buy loans, package and sell them to this hungry crowd--helped create the incredible run-up in the mortgage market over the last three years.
The provision wouldn't have a significant effect on mortgage demand because rates are at their lowest levels in decades, said Guy Cecala, publisher of Inside Mortgage Finance.
Every slight hiccup in measures of home sales, new construction or mortgage demand is parsed for clues that a stumble is in the offing.
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So far this year, sales of existing homes have held up, as have other indicators of demand such as mortgage applications for home purchase, and mortgage rates remain relatively low.
The subsequent recession and surge in unemployment dinged the demand for many mortgage-related businesses and Realogy was not spared, seeing its cash flow plunge and relying on additional borrowing to stay afloat.
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Even that longtime laggard, apartments, is surging as demand rises, because mortgage payments are climbing, discouraging home buying.
The FHA, although it lost market share, continued to guarantee what it could, adding to the demand that the unregulated mortgage brokers filled.
This huge amount of demand ought to keep mortgage rates low, but instead they have climbed to around 5.5%, from under 5% a month ago, according to BankRate.com.
Fannie and Freddie, whose shares sank to levels not seen since the mid-1990s on Monday, rebounded somewhat on Tuesday after their chief regulator was quoted in wire reports saying it was unlikely regulators would demand more capital for the mortgage giants.
The increased demand for housing arising from lower mortgage rates would provide a floor on further house price declines.
There have been signs the housing market has stabilised, albeit at deeply depressed levels, and lower mortgage rates will bolster demand.
The association blamed higher mortgage rates for slowing demand.
Staffing logistics for underwriters and processors are difficult to balance between demand and profitability models and the mortgage lending industry has not yet found a way to justify the manpower cost of processing and underwriting pre-approvals.
The backlog of unsold houses remains high, and rising mortgage rates may further dampen demand.
On the demand side, the technicalities of the mortgage market are thinning the ranks of million-dollar home buyers more than usual.
Moreover, a 4.5% mortgage rate will raise housing demand significantly.
In a world where countries like China and India would increasingly demand sophisticated financial products, such as mortgage securities and derivatives, he viewed the big banks as invaluable national assets.
The Mortgage Bankers Association is reporting a 4.3 percent decline in weekly mortgage applications last week, as demand for refinancing dropped for the fourth week in a row.
The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes.
Investors are no longer feeding the mortgage bond beast, or cutting off demand and thus severely crimping the ability of companies like Countrywide to operate.
For instance, when guaranteeing home loans, Freddie Mac and Fannie Mae, America's giant mortgage companies, could be required to demand higher down-payments as a proportion of the purchase price, the higher house prices are relative to rents.
The higher demand for housing pushes home prices up despite the higher mortgage rates.
In particular, the impact of the credit crunch, by restricting the availability of mortgage finance, is having a negative effect on demand in both Europe and America.
Dr. KARL CASE (Wellesley College): What really determines the long-term mortgage rate is some combination of inflationary expectations, international demand, the value of the dollar.
The 10% increase is being applied to all mortgage lenders and is seen as yet another way to tackle demand.
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Many commercial properties still are suffering from high vacancy and low demand, and the resulting defaults have caused losses for some commercial-mortgage security investors.
What's more, demand for refinancing is declining, since many homeowners already took advantage of lower mortgage rates.
The manufacture of these mortgages appeared to be driven by a limitless demand for securitized debt, with investors throughout the world buying interests in various mortgage pools.
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Mr. Sorsby figures the Fed's withdrawal will prompt at least a one-percentage-point rise in mortgage rates, which he fears could squash recent glimmers of more demand for homes.
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