Is the Credit Crisis Over?

No, probably not. But there were some significant developments this week in the mortgage industry that seem to be positive indicators for the near term future. First is the creation of the coalition of major banks and mortgage lenders to place measure to offer assistance to homeowners in danger of foreclosure. Second was the speech given by the President of the Federal Reserve in Boston, where he offers some insights regarding the state of the sub-prime mortgage industry. He indicated that while many buyers took advantage of the sub-prime industry when they purchased their home, most mortgagors have either built respectable credit ratings, or their homes have appreciated enough in value that they can now refinance their home using a prime lender with prime mortgage rates.


The bottom line here is that the tide of foreclosures that most mortgage experts are predicting may not ever even come to pass. Instead, we're likely to see a flurry of activity while homeowners who originally purchased using a sub-prime lender refinance their homes using a prime lender. This should spark a very competitive environment between lending institutions, and will will likely lead to some of the lowest mortgage rates we've seen since news of the collapse of the sub-prime lending industry first broke.