Top tips for reducing loan costs: Structured Finance CEO

Recent Case-Shiller data reveals that home prices in the 20 largest US cities have surged by an average of 7.2% year over year. In light of this increase, Structured Finance Association CEO Michael Bright joins Wealth! to offer insights into how borrowers can potentially reduce their loan burdens.

Bright emphasizes the importance of working with a broker agent and thoroughly exploring options. He advises homebuyers to "shop around" and build relationships with brokers. These connections can potentially help borrowers "get a loan at a lower rate than you otherwise would."

"I really don't want houses to continue to be unaffordable for so many Americans, and we are at historic unaffordability levels and really the reason for that is supply shortage," Bright tells Yahoo Finance, adding, "There is a national effort right now to fix this, but it is a slow-moving train."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith

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According to the case, Schiller Index the leading measure to help calculate housing prices in the US home prices in the 20 biggest cities rose 77.2% annually in April.

There's some good news and bad news there.

The bad news.

The housing prices have never been more expensive.

The good news is, that rate increase is actually slowed down from March.

Our next guest argues that one way to deal with high prices along with high mortgage rates, is to consider securitized loans when purchasing a home here and for more.

We welcome in Michael Bright structured Finance Association.

CEO Michael, great to see you here in studio this time.

This place is great.

I'm coming here every time.

Absolutely, We we'd love to have you back any time.

All right?

So, first and foremost as people are trying to digest the latest housing data that's come out this morning.

You're continuing to make the case here for securitized loans for some of those potential buyers out there.

Why is that?

Well, um, securitization is actually something that happens in the back end, So, uh, as a customer, you may or may not even know whether your loan is on a bank balance sheet or it goes into a bond or security.

But chances are pretty good that it's gonna end up in a bond and security.

That is why rates you can get a 30 year fixed rate loan.

If you are in a country that only has banks, for example, like Europe and Asia, you mostly can get variable rate loans.

They're not 30 year fixed rate, and they're much higher than where they are in the United States.

What I would say to a borrower to to a consumer looking to buy a loan is, you know, use a broker agent.

Usually your realtor will have a relationship.

They will shop for various options, and you'll probably get, um, a loan at a lower rate than you otherwise would.

Um, then they're gonna tell you who your servicer is and just work with that servicer, and that's the relationship you'll form over the course of being a homeowner.

How much of a difference are we talking about in the loan that you could get?

Well, it it's difficult to know exactly, but I I mean, I think if we had a country that didn't have any securitization whatsoever.

Um, interest rates would be, you know, two points higher, 200 basis points, at least higher.

So, uh, right now we're looking at mortgage rates around seven.

Seven and an eight.

which is there's a psychological effect just because for so many years, the Federal Reserve have been suppressing those rates and keeping them at around 3 3.5%.

A lot of people are looking at the 7% and saying, Oh, my gosh, I gotta wait for rates to come down before I can buy a home.

That isn't something I would advise.

I think 7% is still quite low by historical average.

And if we didn't have you know, the bond market facilitating this, you could be in the 9 10% range.

What are some tips for those who are out there trying to reduce their mortgage as well right now reduce their mortgage debt or just reducing their mortgage debt?

Trying to figure out where lower mortgages are, are sometimes available due to securitization or or, you know, even what their down payment consideration should look like.

Yeah, it's, um, we We have a very liquid market.

Um, for down payments, you know, we don't you don't need 20% down.

You can get what's called mortgage insurance if you have less than 10 20% down.

So you shouldn't be of the view that if you don't have 20% down, you're you're locked out of the market.

When you're making a a home purchase, it really needs to be the right thing for you for the long term.

So my advice to any prospective borrower or buyer would be.

Do you wanna live in this home?

Is that right for you?

Is it right for your family over the course of, let's say, five years at least, um, if that's the case, then go ahead and buy.

Don't worry about the interest rate.

They're still low by historical standard.

If you're just speculative buying, that's something I do not advise.

I think that it's a dangerous place, and that's gotten us in trouble in the past.

I just wanna And by getting your estimation or or your kind of crystal ball outlook on where prices might continue to move.

When we we were just diving into the the case, Schiller Home prices deceleration.

Um, that was marked in this most recent reading, at least.

Do you think that'll continue here?

Well, I I'm sorry to say that.

I hope so.

Because, you know, even though I'm a homeowner, I really don't want houses to continue to be unaffordable for so many Americans.

And we are at historic unaffordability levels.

And really, the the reason for that is supply shortage, so don't have enough affordable housing supply.

This is mostly state local level.

There's a lot of regulation that limits how much affordable housing supply can be built.

There's a national effort right now to fix this, but it is a slow moving train.

Um, I hope over the next 5 to 10 years, we're gonna be building more housing supply, and that will alleviate some of this problem.

But right now, there are just more people who want to own homes than there are homes available.

Michael Bright, who's the structured Finance Association?

CEO joining us here.

Thanks so much, Michael.

Thank you very much.

All right,