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The bond market is under extreme pressure and your mortgage rate could be effected

 

The secondary market for bonds that are not backed by treasuries is in grave despair.

The market for a completive interest rate on a jumbo loan is all but non existent. The spread between conventional loans and jumbo loan rates is over 3% for many lenders. The root cause of this wide spread is the fallout in the secondary marketplace. Traditional bonds that carry AAA ratings and have performed amongst the top tier of any financial investment are being severely downgraded because of fears within the credit markets. Lenders such as Thornburg mortgage are being faced with margin calls, not as a direct result of the performance of their assets, rather as a concern over their future performance. One of the nations largest bond insurers is AMBAC and they have faced enormous pressure as rating agencies have cut their bond ratings, creating an imbalance on their portfolios and greatly reducing their liquidity. A key component to this challenge is the method of accounting that these business are forced to used which is marked to market accounting for the value of an asset based on its present value versus an expected value is What is becoming more apparent is that the markets may not be able to correct this without assistance from the government. The amount of real exposure versus perceived exposure has swung to such a large extent their is little to no money left for quality financing in the market. A

3-5-2008 ? LoanNetwork.com

 

 

 

 

bond market fiasco @ loannetwork.com

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