Bank Failures
Bank Failures
After First Republic Bank bit the dust last week, the Federal Reserve signaled a pause in rate increases could be on the table at the next meeting in June.
Tighter lending practices are to thank for that potential rate hike reprieve. On the heels of this year’s third bank collapse, regional lenders fearing liquidity issues will rein in debt offerings.
“The question becomes: Will the tightening of credit conditions to retain or improve liquidity by those banks be enough to significantly slow economic activity?” said Fannie Mae Chief Economist Douglas Duncan.
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In early March, Brown Harris Stevens broker Mindy Diane Feldman had reservations about a First Republic Bank loan.
A buyer had offered to purchase a New York City co-op and had pre-approval from First Republic for a below-market-rate mortgage — the bank’s specialty. The broker wanted to ensure that if the Federal Reserve hiked interest rates, it wouldn’t affect the closing or the buyer’s ability to meet the co-op board’s financial requirements.
Two days after the broker asked for details about the mortgage, Silicon Valley Bank collapsed. Fearing that First Republic could get caught in the maelstrom, The real estate broker urged her client to take another bidder’s all-cash offer.
Filed Under; Smart Move
Source: The Real Deal
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The FDIC closed seven more banks on Friday, and that brings the total FDIC bank failures to 106 in 2009.
Looking to buy a condo, you should buy now. If you wait too long, there might not be any banks left to give you a mortgage.
File Under: Cash is King.
