The week of September 21, 2008, stands as a pivotal moment in the mortgage market, marking the acceleration of a financial crisis that would have far-reaching consequences. This period was characterized by the critical stage of the subprime mortgage crisis, with liquidity in global credit markets severely contracted and threats of insolvency looming over investment banks and other institutions. The United States took dramatic action by placing two government-sponsored enterprises, Fannie Mae and Freddie Mac, into conservatorship to ensure the financial soundness of these companies, a move supported by key figures in the U.S. government and Federal Reserve.
In the midst of these significant governmental interventions, mortgage rates experienced slight movements. After a surge in the previous week, mortgage rates were largely unchanged during the week ending October 2, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 6.10 percent, and the 15-year fixed-rate mortgage edged up slightly. Rates on Treasury-indexed adjustable-rate mortgages (ARMs) saw a small decrease.
The effects of the economic downturn were evident in the mortgage industry, with a substantial reduction in the originations of subprime loans and jumbo loans from the previous year, indicating a tightening of lending practices in response to the crisis. Despite the tumultuous conditions, the Federal Reserve data indicated that the majority of the commercial banks and other lending institutions that filed HMDA data held a significant portion of the mortgage dollars outstanding, which suggests a concentration of mortgage activity among these filers.
This period demonstrated the fragility of the financial systems and the interconnectedness of mortgage markets with broader economic health. The mortgage market’s condition during this time was a clear reflection of the broader economic challenges, which led to the National Bureau of Economic Research declaring the start of the recession in December 2007. The market’s response to these challenges set the stage for regulatory changes and a re-evaluation of lending practices in the years that followed
Too discrete to give his real age (but certainly in the grizzled veteran bracket), Tom is an Army brat who spent much of his childhood overseas. After moving back to Florida in the 80’s with his family, Tom worked a variety of jobs after college before finding his calling in the mortgage industry. Now, adding his decades worth of experience to this site, Tom hopes to help others with his knowledge.
After working through the 2008 crisis in a hard hit bank, Tom knows only too well the impact his industry has on people’s lives. Now semi-retired, Tom spends his days keeping up with the latest news in the mortgage industry (and finding the odd hour or three to fish).