Real Estate Slow Down

Real Estate Slow Down

High interest rates mean a slowdown

October 30, 2005

BY ALEKSANDRS ROZENS

The last four years will likely be remembered as a gilded age for anyone in real estate, especially mortgage bankers. But with interest rates rising, the industry is preparing for a slowdown that might prompt some lenders to merge with their competitors.

Consumers could be the winners from the mortgage banking industry's scramble for customers in the months leading up to this anticipated consolidation. Already home buyers are seeing lenders cutting loan fees, and some lenders are willing to offer lower mortgage rates even if it takes away from their profits.

"Companies are losing money to keep market share," said Douglas Duncan, chief economist at the Mortgage Bankers Association. "The consumer is being subsidized because the competition is so fierce. For the short run, the consumer is getting a better deal."

Once that period of consolidation and mergers is over...

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