Strong mortgage brokers can make difference today - Review & Forecast Section III

Real Estate Weekly, Jan 29, 1992 by Alan Rosenbaum

Strong mortgage brokers can make difference today

One reality appears to be emerging very clearly in the residential sales field. In a marketplace where you can't afford to have any deal, irregardless of its size, fall through the cracks, a knowledgeable, resourceful mortgage broker can make a difference. A big difference.

It's no accident that some of the largest and most successful residential real estate firms in New York are today using our organization as their in-house mortgage brokers. It's also not hard to understand why more and more co-op, condominium and private home buyers are being urged today to use the services of a financing specialist.

There can be little doubt that the chances of closing a residential sale today are greatly enhanced whenever a mortgage broker is part of the picture. And that means as quickly following a contract signing as possible.

A professional mortgage broker can not only help buyers choose the best mortgage product and lending institution for his or her needs, but can speed both the loan application and approval processes. And in most cases, a buyer will save time and money as a result.

Realistically, attractive financing is one of the great motivators for purchasing a home or apartment in the current economic climate. And it appears that 1992 will be an exceptional period to secure favorable financing.

Certainly, the year could not have begun on a more promising note in that regard. On Dec. 20, the Federal Reserve lowered its discount rate by a full point to 3.5 percent, the lowest level in 27 years. In addition, the Fed also cut the federal funds rate, which banks charge each other for overnight lows, from 4.5 percent to 4 percent.

The large cut was an obvious effort by the Fed to stimulate housing and revive the economy. Many of the nation's largest banks quickly cut their prime lending rate a full point from 7.5 percent to 6.5 percent. Although nothing is ever certain, these cuts are expected to continue to put additional downward pressure on rates for conventional mortgages.

It's interesting to note that since January 1991, rates for fixed rate mortgages have fallen from 10 percent to as low as 8 percent. Adjustable rate mortgages, which are tied to the short term securities, have also dropped to as low as 5 percent.

The one thing that hasn't dropped is the growing bond between residential brokers and their mortgage counter-parts. I expect that to continue to grow well into this decade and beyond.