Tuesday, August 21, 2007

nobody wants to lend money anymore

Capital One and the mortgage domino effect

"A severe economic slowdown is unavoidable given the seizure we've had in the financial markets," says Tom LaMalfa, managing director of the mortgage research company Wholesale Access. "As providers become fewer, it will increase the cost of mortgage financing until you get to the point where no one can get a loan."

Posted by vfr @ 08:10 AM (865 views)
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5 thoughts on “nobody wants to lend money anymore

  • Excuse me?

    All that will happen is that businesses (in particular) will be able to get properly priced commercial property to run their firm/s from. Is that a recession?

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  • Halfway down this article there’s a link off to a piece written yesterday: “Capital One to close mortgage unit, cut jobs”. Pretty interesting, worth following the link after you’ve read the article submitted. It details a lot of problems in the mortgage industry.

    Meanwhile, I was wondering if there is any reason why the Fed/world banks can’t keep just bailing out the markets with short-term loans as they have been doing over the last few weeks. Can’t they just do this indefinately until confidence returns to the market? Why risk inflation by slashing the interest rate?

    Also, why didn’t they do this last time there was a crunch? If they did try it, does anyone know how it played out?

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  • VI’s will always want low interest rates and no one is going to be bleating as much as the mortgage companies. Just as the EA’s keep saying just before the BOE decisions that the market is cooling!

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  • sold 2 rent 1 says:

    night,

    “Can’t they just do this indefinately until confidence returns to the market?”
    Good question.

    I’m sure this type of behaviour would spook the markets even more.
    They would suspect some unknown massive problem and sell even more.

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  • C'mon Correction says:

    It’s baffling to think these mortgage companies have been lending at such high unaffordable multiples (in the medium-long term) and then a few years down the line scratch their heads and say “we didn’t see this coming” !!!

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