Tumbling Mortgage Rates resulting to tight market situation Word Count: 486 Summary: Mortgage rates tumbled, as short-term mortgage rates shot up higher sending the share of variable rate applications tumbling. Keywords: mortgage, finance Article Body: Mortgage rates tumbled, as short-term mortgage rates shot up higher sending the share of variable rate applications tumbling. The share of adjustable rate mortgage application sank though a big drop in yield of the 1year Treasury-indexed ARM may change that. However, latest report suggests that late payments on subprime adjustable-rate mortgages have increased for eight consecutive quarters and currently sit near 17%, while delinquency improved on the fixed rate mortgages and loans insured by the Federal Housing Administration. Fueled by activity in just four states, foreclosure continued to rise during the latest quarter. Among the rising fears, one is that the sub-prime mortgage crisis is beginning to infect America’s $300 car loan market as evidence emerges of a surge in the numbers of motorists in arrears. Lenders who made more than 40,000 sub-prime car loans in 2006 saw the percentage on those in arrears jump from 6.8% to 8%, while smaller lenders who lend to offer loans to higher risk customers saw their arrears levels more than double from 6.2% in 2005 to 14.6% in 2006. Wall Street is worried that the same mortgage borrowers who are falling behind with their home loan repayments will also miss repayments on their car loans. The housing slump in the country is causing financial pain to banks that provided expensive home loans to low-income householders with poor credit ratings. The sub-prime car loan market targets the same risky borrowers. Like the mortgage market, sub-prime car loan companies package loans and sell them to financial investors. Tighter lending conditions around expanding subprime mortgage market could even splash some cold water on the housing sector in the months ahead. Some lenders in the alternative mortgage market have already jacked up mortgage rates or withdrawn products in the face of rising costs. Several subprime lenders even have raised their mortgage rates by 100 basis points in the past three weeks. Commenting on the impact of the issue, Alex Haditaghi, chief executive officer of MotgageBrokers.Com, a publicly traded mortgage company, said, it will affect not all consumers, but a niche market however, that niche market is one with very active house buyers. Most economists figure that the market is ripe for a slowdown anyway. Canada Mortgage and Housing Corporation, for example, expects housing starts will slip 3% this year and about 6% next year. However, the credit squeeze is on the run that began in the US and has rippled throughout the world as a potential risk. Earnings and liquidity continue to preoccupy executives and boardrooms of mortgage companies though some merger activity maintained. But as lenders grapple with unprecedented chaos in the mortgage market, class action attorneys are busy filing numerous lawsuits alleging investors were deceived. Global markets continued to reflect concerns about economic impact of the crisis. The dollar fell to a record low against the euro and US equities also decline. Although some markets have already improved since the turmoil but the crisis would unwind at different rates in different markets.