(Continued from a previous post here)
Interest rate driven growth in first-time residential purchases and refinance activity swelled mortgage demand in the first two quarters of 2009. Although public policy of low rates and tax credits has had the intended demand jumpstarting effect, for the small business arm of mortgage banking, there is evidence that a portion of that demand is being curtailed at origination as a byproduct of severely limited liquidity.
Downstream of these events, the survival of independent, community-based mortgage businesses is threatened. A contracted marketplace of independent mortgage bankers is creating a less cost competitive environment for purchase borrowers of every ilk, dangerously limiting refinance opportunities for troubled homeowner households and driving property values lower as asking prices adjust to lure buyers with reduced buying power.
Part four tomorrow…