During the past week, the ten year treasury yield has fallen almost 40 basis
points to approximately 3.70%. This decline has rekindled the refinancing market
so much so that Fannie Mae published a revised 2004 mortgage origination forecast
of $2.4 trillion- which would be the third highest total ever.
But can credit unions continue to participate and benefit from this demand
when much of the refinancing as well has purchase mortgage volume has traditionally
been in long-term fixed-rate product?
Two observers believe that it is not only possible, but also in credit union’s
and the member’s interest that credit unions become more active in booking
first mortgages. How? By using a variety of adjustable rate product and removing
unnecessary fee and underwriting obstacles to refinancing.
Alan Greenspan in his address at the CUNA GAC in late February made two noteworthy
statements about the mortgage financing market today:
- Calculations by market analysts . . . suggest that the cost of the benefits
conferred by fixed-rate mortgages can range from 0.5 percent to 1.2 percent,
raising homeowners’ after-tax mortgage payments by several thousand
- American consumers might benefit if lenders provided greater mortgage product
alternatives to the traditional fixed-rate mortgage.