Although there is no Betty Ford clinic for bad lending — and the end to the nation’s foreclosure troubles seems nowhere in sight, you can make money from the mortgage industry’s woes. Mortgage lending used to be a relatively sober and low-risk way to make decent amounts of money. You take money from depositors, pay them interest, and lend their money out to mortgage borrowers at a higher rate of interest. It’s not a business model on a par with, say, search engine technology, but it used to be difficult to find mortgage lenders in bread lines. To date, making bad loans is still a poor way to make money. But investing in good mortgage loans will get you a decent yield, particularly in these days of miserable returns from bank CDs.
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The housing market is signaling there will be an economic recession by the 2020 election, according to Benn Steil, director of international economics at the Council on Foreign Relations.
Last week, the 30-year fixed-rate mortgage fell, spurring another uptick in refinance demand, resulting in mortgage applications rising by 0.5%, according to the Mortgage Bankers Association. The organization indicates that on an unadjusted basis, the index crawled forward 1% for the week ending on October 11, 2019. Despite this increase, Joel Kan, MBA’s vice president of economic and industry forecasting, said the ongoing interest rate volatility is impacting a borrowers’ ability to lock in the lowest rate possible.