Latest news with #mortgagelenders
Forbes
4 days ago
- Business
- Forbes
Mortgage Defaults Are Exploding: What Smart Investors See Coming
RICHMOND, CA - JUNE 13: A sign is posted in front of a foreclosed home for sale June 13, 2008 in ... More Richmond, California. Nationwide home foreclosures filings spiked nearly 50 percent in May compared to one year ago and up 7 percent from April of this year. 261,255 homes reported foreclosure-related filings in May, compared to 176,137 one year ago. (Photo by) Last week, I got off the phone with the CEO of one of the largest mortgage lenders in the United States. What he told me wasn't in any press release or CNBC segment. It wasn't in the Fed minutes or Wall Street research notes. It was quietly devastating. 'Mortgage defaults are up over 200% in the last six months.' That one sentence reframed the macro picture. It confirmed what many investors have felt beneath the surface: this isn't just about high interest rates or inflation fatigue; it's about behavioral collapse. The U.S. consumer is no longer just stretched. They're snapping. For all the talk about a 'soft landing,' this is a hard truth. We're witnessing the early stages of a credit deterioration cycle that markets are failing to price in. It's showing up first in subprime auto, now in mortgages, and next it may bleed into broader consumer credit and regional banks. This isn't a doom prediction. It's a recognition of inflection points I've spent my career identifying. The signs are flashing red for sectors exposed to leveraged consumers and real estate-linked lending. Investors need to ask: where is the risk hiding? Which companies are fragile? And more importantly, which ones are built to survive this storm? The ripple effects of a 200% spike in mortgage delinquencies could be significant for equities, especially as we look toward 2026. Those chasing high-beta names and ignoring balance sheet quality might be walking into the next drawdown. What's Really Driving The Spike in Mortgage Defaults? A 200 percent increase in mortgage delinquencies in just six months is not a statistical anomaly. It is the result of three powerful forces converging beneath the surface of the economy. Investors who ignore them are missing early warnings. The first is interest rate fatigue. After two years of relentless tightening by the Federal Reserve, the impact is finally hitting home. Variable rate resets on mortgages and home equity lines of credit are taking a toll. Credit card balances are ballooning. For many Americans, homeownership is no longer just unaffordable to achieve. It is becoming unaffordable to maintain. Second, there is the pandemic overhang and the disappearance of so-called excess savings. That story has ended. Consumers have already spent on their reserves trying to maintain lifestyle spending during periods of high inflation. Now, the cushion is gone. What remains is a fragile financial position with no room for error. Third, wage stagnation among lower income earners is compounding the problem. Nominal wages may have increased, but real wage growth for most working Americans has failed to keep pace with the cost of living. Prices have climbed. Paychecks have not. Every expense now feels heavier. The margin of error no longer exists. Mortgage delinquencies are not a blip in the data. They are a leading indicator. They are the first crack in a leveraged economy. And that matters for every investor trying to assess risk as we head into 2026. The Credit Cycle Always Starts Quietly It's easy to overlook how credit problems really begin. On the first day, they don't make the news. It always starts quietly. A few lenders tighten up on new credit issuance. Then, small losses begin to tick higher. Next, earnings guidance from banks starts to shift. After that, markets begin waking up to the reality that a credit downturn is underway. This is not alarmism. It is pattern recognition. We have seen this sequence before, in 2007, in 2015, and again in early 2020. Each time, there was a belief that the economy was stable, and the consumer was resilient. And each time, the real deterioration began not at the edges, but in the middle. It doesn't take a collapse in subprime to trigger broader concerns. Often, the first real cracks appear in prime borrowers who were stretched thin, quietly falling behind while headlines focus on everything else. Investors who wait for the obvious signs are usually too late. The time to pay attention is when the signals are faint but consistent. Right now, those signals are getting louder. when the signals are faint but consistent. Right now, those signals are getting louder. Why Markets Haven't Priced In Mortgage Defaults Markets are still fixated on tech earnings, inflated AI valuations, and the idea of a soft landing. That optimism may hold for now, but it becomes fragile the moment cracks spread beyond the housing market. The risk is in the timing. Mortgage delinquencies are a lagging indicator. By the time they appear in earnings calls or data sets, the damage has already begun. The real signal is behavior. It shows up when consumers start missing smaller payments first, credit cards, car loans, utility bills long before they default on a mortgage. If middle income borrowers are falling behind on their homes, you can assume the rest of their financial life is already under strain. Despite this, the market remains complacent. This pricing disconnect is not just curious. It is dangerous. When asset prices ignore early signs of consumer stress, they set up for sharp repricing. The smarter move is to position now, while others are still distracted by headlines and hype. Who Gets Hurt First? Let's get specific. A surge in mortgage delinquencies does not stay isolated. It bleeds into sectors that are structurally exposed to consumer credit stress. The following areas are especially vulnerable. When delinquencies rise, the pain does not stay in one pocket. It spreads. Investors need to be ahead of that curve, not reacting to it. Where The Opportunity Lies Most investors either panic or freeze when cracks begin to show. But disciplined investors know that dislocation creates opportunity—if you know where to look and what signals to track. At The Edge, we are actively watching three key areas where volatility could unlock real upside. 1. Special Situation Plays Disruption often forces companies to streamline. For some well-capitalized lenders, that could mean divesting non-core operations or spinning off riskier divisions to focus on high-quality credit or commercial lending. These restructurings are rarely well understood at the start. But they often create mispricing's when market participants fail to re-rate the remaining business. The telltale signs are in the filings. Look for changes in segment disclosure, restructuring charges, or management commentary that hints at strategic realignment. Breakups are not just governance stories—they are often the fastest path to unlocking hidden value. 2. Deep Value With A Catalyst Valuation alone is not enough. A stock that looks cheap may stay cheap unless something forces a shift. Take Synchrony Financial. On the surface, it trades at a discount. But without a catalyst such as activist interest, M&A potential, or insider accumulation, the market has little reason to reprice the risk. We are not just hunting for discounts. We are hunting for change, backed by signals that behavior inside the company or on the shareholder register is about to shift. 3. Counter-Cyclical Buys Consumer stress does not hurt everyone. In fact, some business models thrive in these conditions. Companies that operate in credit recovery, debt collection, or financial tech platforms designed to manage delinquencies could see a tailwind. The same goes for discount retailers with strong balance sheets and pricing power. These are not hope trades. They are behavioral trades. When the consumer tightens spending, the beneficiaries are often hiding in plain sight. The key is knowing which names have real leverage to that shift and which are simply cyclical placeholders. The Smart Investor's Playbook At The Edge, we approach markets with a clear framework. In environments like this, the best returns come not from reacting to headlines, but from reading signals before they turn into narratives. Here's how we think about it: This is not a time to be passive. It is a time to be process-driven, not emotionally reactive. Investors with a disciplined approach to signal tracking will be the ones ahead of the market, not chasing it. The Cracks Come Before The Collapse Most investors wait for a chart to break before they take action and they will wait for sure with mortgage defaults, as no one wants to believe it. But the smartest ones look for cracks before they spread. The CEO I spoke with was not panicking. But he was direct. Lending standards are tightening. Defaults are rising. And the pressure is not at the edges—it is building in the middle. The market may still be celebrating new highs in the S&P 500. That celebration can vanish quickly if the consumer buckles under the weight of stagnant wages, high rates, and rising mortgage defaults. Behavior tells the story first.
Yahoo
18-05-2025
- Business
- Yahoo
Mortgage and refinance interest rates today, May 18, 2025: Lower rates are encouraging for home buyers
Mortgage rates have decreased today. According to Zillow, the average 30-year fixed interest rate is down eight basis points to 6.77%, and the 15-year fixed rate has declined by 10 basis points to 6.03%. Falling rates are encouraging — and there are other ways to secure a lower mortgage rate too. Apply for preapproval with three or four mortgage lenders to compare their interest rates and fees to make sure you're getting the best deal. You can also pay for discount points at closing to lock in a lower long-term mortgage rate. Discuss your options with the mortgage lenders you're considering. Dig deeper: 6 steps to choosing the right mortgage lender Have questions about buying, owning, or selling a house? Submit your question to Yahoo's panel of Realtors using this Google form. Here are the current mortgage rates, according to the latest Zillow data: 30-year fixed: 6.77% 20-year fixed: 6.25% 15-year fixed: 6.03% 5/1 ARM: 7.08% 7/1 ARM: 7.40% 30-year VA: 6.31% 15-year VA: 5.64% 5/1 VA: 6.29% Remember, these are the national averages and rounded to the nearest hundredth. These are today's mortgage refinance rates, according to the latest Zillow data: 30-year fixed: 6.97% 20-year fixed: 6.64% 15-year fixed: 6.25% 5/1 ARM: 7.56% 7/1 ARM: 7.51% 30-year VA: 6.47% 15-year VA: 6.17% 5/1 VA: 6.37% Again, the numbers provided are national averages rounded to the nearest hundredth. Mortgage refinance rates are often higher than rates when you buy a house, although that's not always the case. Read more: Is now a good time to refinance your mortgage? Use the mortgage calculator below to see how various mortgage terms and interest rates will impact your monthly payments. Our free mortgage calculator also considers factors like property taxes and homeowners insurance when determining your estimated monthly mortgage payment. This gives you a more realistic idea of your total monthly payment than if you just looked at mortgage principal and interest. The average 30-year mortgage rate today is 6.77%. A 30-year term is the most popular type of mortgage because by spreading out your payments over 360 months, your monthly payment is lower than with a shorter-term loan. The average 15-year mortgage rate is 6.03% today. When deciding between a 15-year and a 30-year mortgage, consider your short-term versus long-term goals. A 15-year mortgage comes with a lower interest rate than a 30-year term. This is great in the long run because you'll pay off your loan 15 years sooner, and that's 15 fewer years for interest to accumulate. But the trade-off is that your monthly payment will be higher as you pay off the same amount in half the time. Let's say you get a $300,000 mortgage. With a 30-year term and a 6.77% rate, your monthly payment toward the principal and interest would be about $1,950, and you'd pay $401,922 in interest over the life of your loan — on top of that original $300,000. If you get that same $300,000 mortgage with a 15-year term and a 6.03% rate, your monthly payment would jump to $2,536. But you'd only pay $156,558 in interest over the years. With a fixed-rate mortgage, your rate is locked in for the entire life of your loan. You will get a new rate if you refinance your mortgage, though. An adjustable-rate mortgage keeps your rate the same for a predetermined period of time. Then, the rate will go up or down depending on several factors, such as the economy and the maximum amount your rate can change according to your contract. For example, with a 7/1 ARM, your rate would be locked in for the first seven years, then change every year for the remaining 23 years of your term. Adjustable rates typically start lower than fixed rates, but once the initial rate-lock period ends, it's possible your rate will go up. Lately, though, some fixed rates have been starting lower than adjustable rates. Talk to your lender about its rates before choosing one or the other. Dig deeper: Fixed-rate vs. adjustable-rate mortgages Mortgage lenders typically give the lowest mortgage rates to people with higher down payments, great or excellent credit scores, and low debt-to-income ratios. So, if you want a lower rate, try saving more, improving your credit score, or paying down some debt before you start shopping for homes. Waiting for rates to drop probably isn't the best method to get the lowest mortgage rate right now. If you're ready to buy, focusing on your personal finances is probably the best way to lower your rate. To find the best mortgage lender for your situation, apply for mortgage preapproval with three or four companies. Just be sure to apply to all of them within a short time frame — doing so will give you the most accurate comparisons and have less of an impact on your credit score. When choosing a lender, don't just compare interest rates. Look at the mortgage annual percentage rate (APR) — this factors in the interest rate, any discount points, and fees. The APR, which is also expressed as a percentage, reflects the true annual cost of borrowing money. This is probably the most important number to look at when comparing mortgage lenders. Learn more: Best mortgage lenders for first-time home buyers According to Zillow, the national average 30-year mortgage rate is 6.77%, and the average 15-year mortgage rate is 6.03%. But these are national averages, so the average in your area could be different. Averages are typically higher in expensive parts of the U.S. and lower in less expensive areas. The average 30-year fixed mortgage rate is 6.77% right now, according to Zillow. However, you might get an even better rate with an excellent credit score, sizable down payment, and low debt-to-income ratio (DTI). Mortgage rates aren't expected to drop drastically in the near future, though they may inch down here and there.
Finextra
07-05-2025
- Business
- Finextra
FCA consults on steps to simplify mortgage rules
We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage. 0 Doing so will help consumers better navigate their financial lives and support growth, both priorities in our new strategy. Our consultation supports greater choice for consumers, making it: quicker and easier for consumers to discuss options with a firm, while still having access to advice if they want or need it easier for consumers to reduce their mortgage term, lowering the total cost of borrowing and reducing the risk of repaying into later life easier for consumers to access cheaper products when remortgaging Over the last decade, we have driven improvements in mortgage lenders' conduct standards and culture. Now with the introduction of the Consumer Duty which sets clearer, up-to-date standards in financial services, we want to remove guidance that's no longer required and provide greater opportunity for innovation. We have already reminded firms of flexibility in our rules to help people access a mortgage. In June, we will follow this work with a further public discussion on the future of the mortgage market. This will include consideration of risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending into later life and consumer information needs. Emad Aladhal, director of retail banking said: 'Our strategy aims to deepen trust and rebalance risk to support growth and improve lives. 'That's why, with the Consumer Duty now in place to maintain high standards, we want to make it easier, faster and cheaper for borrowers to access and make changes to their mortgage.' This forms part of the work plan set out in our letter to the Prime Minister, where we set out nearly fifty commitments to support growth of the UK economy.
