There are reports coming that say that because of the new Federal Reserve policy changes banks are going to recast mortgage loans. Mortgage recasting offers two attractive benefits for homeowners with some extra cash in their pocket: lower monthly payments and less interest paid over the life of the loan.
A recast refers to a borrower who makes an additional principal payment and then asks the bank to re-amortize the loan at the existing interest rate. The result is that while the loan term remains the same, monthly payments are reduced.
Although there is no direct relationship between mortgage rates and the stock market, it can be argued that an increase in mortgage rates results in lowered levels of discretionary income and, consequently, a decrease in stock market investment. However, a variety of other factors, such as government intervention and the housing market as a whole influence this situation.
A mortgage-backed security (MBS) is a type of asset-backed security that is secured by a mortgage or collection of mortgages. This security must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pays periodic payments that are similar to coupon payments.
On a macro level, there are other mortgage rates which increase the liquidity in the crypto market. If there is more money to invest, the more the value of each crypto will become. Last year, both Etherum and Bitcoin lost value, but mortgage markets held strong. However, when it comes to results, investing in crypto markets could have gotten you profits as much as the mortgage markets.
Lenders typically don’t hold onto mortgage loans for the life of the loan. Instead, they create mortgage-backed securities by packaging groups of loans together. These securities, also known as mortgage bonds, are then traded on the bond market. Conditions on the bond market play a large role in determining mortgage rates.