Online lender Social Finance (SoFi) has announced plans to go public through an $8.65 billion merger deal with Social Capital Hedosophia (SCH), a special purpose acquisition company (SPAC) headed by venture capital investor Chamath Palihapitiya.
The transaction values SoFi at approximately $6 billion and is expected to provide up to $2.4 billion in cash proceeds. Existing SoFi shareholders will roll 100% of their equity into the combined company, according to its Press release.
The San Francisco-based start-up’s goal is to create a “one-stop financial platform,” and SoFi Chief Executive Anthony Noto told Reuters that their diversified products could help them “navigate both a high interest and low-interest environment.” Noto also said that the company has seen rapid growth in its mortgage refinancing business and investment products in the past year.
Read more: Could 2021 be the year of consolidation in mortgage lending?
Once the deal is closed, SoFi will use the proceeds to further expand its business and pay back debt from its $1.2 billion acquisition of payment software Galileo.
The merger has already received unanimous approval from SCH board of directors and the independent directors of SoFi’s board of directors. It is expected to close in the first quarter of 2021.
“SoFi’s innovative, member-first platform has demystified financial services for millions of Americans and simplified the process for those looking to apply for loans, invest their money, obtain insurance and refinance their debt, among many other tasks that were previously arcane and needlessly complicated,” SCH founder and CEO Chamath Palihapitiya said. “Additionally, the acceleration of cross-buying by existing SoFi members has created a virtuous cycle of compounding growth, diversified revenue and high profitability. We look forward to partnering with Anthony and his team as they help even more members to achieve financial independence.”
Something that would surprise people in other parts of the world, banks in Denmark are offering 20-year home loans to the Danish citizens at a fixed interest rate of zero. Denmark has the longest history of negative central bank rates in the world. It stands out globally for having continued with it for a longer period of time than any other country in the world.
The home-finance unit, Nordea Bank Abp can, is offering such mortgages for its customers. It is a lower coupon than even benchmark United States 10-year treasuries.
Since the country’s policy makers drove their rate below zero in 2012, the homeowners in the European country have benefitted from a continuing slide in rates for borrowing.
It seemed to be an unthinkable notion once that the customers can borrow for as long as 20 years without paying interest.
Many central bankers all over the world are currently staying away from hiking rates. Bloomberg, in its quarterly review of monetary policy, suggested that no major western central bank was going to raise rates in 2021.
With the rates continuing to sink, some other banks in Denmark are joining Nordea to provide this package.
Totalkredit, which is a unit of the largest mortgage lender in Denmark, Nykredit Realkredit A/S, said that it would provide its customers loans for 20 years at zero per cent. Denmark’s biggest bank, Danske Bank A/S, may also do the same.
Bloomberg Quint quoted chief housing economist at Nordea Kredit, Lisa Bergmann, as saying that the demand was there and that the bonds backing these mortgages were likely to reach a record high.
The mortgage lenders in Denmark had issued 20-year bonds at zero per cent coupons some years back, when the rates went down because of investors looking for a safe place for their money. It is the first time since then that these rates have come back in the lending market.
Angel Oak Mortgage Solutions (Angel Oak) is going on a hiring spree. In the past 60 days the non-QM lender has added well over 100 new positions, mostly in operations, to support its ambitious growth targets for 2021. Like many lenders, they’ve made underwriting hires as the whole industry struggles with long turn times. More uniquely, though, about 20% of their new hires have no mortgage experience at all.
“These operations trainees are a class of generally 20-somethings who might not be in their first job out of college, but have never been in the mortgage business,” explained Tom Hutchens (pictured), Angel Oak’s executive VP of production. “We’re teaching them all the aspects of the mortgage business and then putting them in an area that fits their skillset and their short-term desires. We feel that in the long term, they’re going to be great adds. Our focus, going forward, is going to be bringing these operations trainees onboard on a monthly basis throughout 2021.”
Read more: Could vaccines end the suburban purchase boom?
Hutchens explained this push as being driven, at least in part, by a need to inject some youth into the industry. He believes it’s a priority for the future of mortgage to make an investment in young talent rather than rely on a steadily aging workforce. It’s an investment that is not without challenges, however. These young people might not necessarily be the ‘plug and play’ hires someone with 10 years of experience might be, but Hutchens and his team are playing the long game and these young operations trainees are a core part of that.
Many of these hires, Hutchens explained, are coming from the service industries that have been hit so hard by COVID-19. While Angel Oak had positive experiences before hiring former restaurant and customer service workers, Hutchens is now noticing how many of the customer-facing and efficiency-related skills from working in these service businesses translate well into the mortgage industry.
These operations trainees begin with basic training, where they learn the fundamentals of mortgage, compliance, Angel Oak’s model, and the work done in various departments. Then the company has a ‘draft’ as different departments select trainees based on their aptitudes, desires, and early impressions. Those trainees then specialize in that department’s work.
Read more: How will Biden’s infrastructure plan change commercial real estate?
Hutchens believes that he’s creating a stable platform for these young employees to grow. Many millennial and Gen Z employees have emphasized stability as a core desire in their future employment. He explained that given non-QM’s orientation towards purchase, these new hires will be spared most rate-driven boom and bust cycles.
“This is a growing segment of the business that’s not growing in a cycle fueled by temporary interest rate conditions,” Hutchens said. “This is fueled by the sheer number of borrowers that fall outside of the pretty narrow agency loan box.
“We believe that non-QM is 10% of the origination market. We’re nowhere near that now, but we’re getting set to grow significantly.”
home loans: Want to avail low interest rates on home loans? Here are 5 ways you could go wrong – The Economic Times Video | ET Now
Due to the covid-led uncertainty, interest rates on home loans have never been more attractive. However, there are 5 lesser-known risks you may be signing up for if you choose to make the most of these rates and buy a house. Watch to know what these risks are and how to mitigate them.
3 Banking Moves That Can Tank Your Refinance – SmartAsset
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If you’re gearing up to refinance your mortgage, the lender’s going to want to check out your credit and assets before you’re approved. One of the things they’ll pay attention to is what’s in your bank account. So if you haven’t gotten those statements ready yet, there’s no time to waste. If you don’t want to raise any eyebrows with the lender, there are certain banking moves you probably won’t want to make until after refinancing.
Check out our refinance calculator.
1. Moving Your Money Around Too Much
Any time a bank lends you money, they’re taking on a certain degree of risk. Seeing that you’ve got a nice wad of cash saved up can quell any fears they may have about approving your refinance. The problem is that it can be difficult to see what the bottom line is if you’re constantly transferring money back and forth between accounts.
If you’ve set up regular transfers from your checking to savings, that could work in your favor since you’re growing your balance. There’s an issue, however, when you’re regularly pulling money out of savings and moving it somewhere else. This move could give the impression that you’re not very adept at managing your finances. When a refinance is on the horizon, it can be a good idea to take a hands-off approach so your statements reflect a stable balance history.
Compare mortgage refinance rates.
2. Making Large Deposits or Withdrawals
Pulling a lot of money out of your account is also another potential trouble spot. The bank might ask for an explanation and that could cause them to reevaluate your entire application. If you’re planning to make a big purchase in cash, you might be better off deferring it until after the lender gives your refinance the green light.
The same thing goes for suddenly making a sizable deposit out of the blue. If your balance increases overnight by thousands of dollars, that’s something the lender’s going to notice. Even if there’s a good reason – such as a relative or friend gifting you money for closing costs – the bank may still have concerns over your ability to repay. If you have to make a large deposit for any reason, it’s a good idea to be prepared to explain why and to provide supporting documents if you have them.
Try using the free SmartAsset closing costs calculator.
3. Opening or Closing Accounts
Again, lenders want to see a certain degree of continuity when it comes to your banking habits so in the month or two prior to refinancing, you might want to steer clear of opening new accounts or closing old ones. Sure, there are some great account opening bonuses to cash in on these days, but if you’ve got five or six different accounts at several banks, your lender could wonder why you need so many.
Closing accounts is also probably a bad idea, especially if they’ve been open for a while. While closing an account won’t hurt your credit score the way getting rid of a credit card would, the bank isn’t likely to look on it favorably. If you don’t have statements for your new account showing where the money went, that could work against you when you apply for a refinance.
Refinancing can save you a lot of money in the long run if you’re able to lower your interest rate or reduce your payments. How you manage your bank accounts prior to and during the refinance process can determine whether your loan application gets the seal of approval.
Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
The housing wealth of homeowners aged 62 and older hit a record high of $7.82 trillion in the third quarter of 2020, the National Reverse Mortgage Lenders Association (NRMLA) reported Thursday.
The association said seniors saw a $121 billion (1.6%) quarter-over-quarter gain in their housing wealth, as the value of seniors’ homes climbed by an estimated $149 billion (1.3%). The increase in home values was offset by a 1.6% or $28 billion rise in their mortgage debt.
The NRMLA/RiskSpan Reverse Mortgage Market Index was up in Q3 to 280.99, another all-time high since the index was first published in 2000.
“The reverse mortgage marketplace has greatly expanded over the past year to include more private-label products that offer consumers more options and greater flexibility compared to the FHA-insured Home Equity Conversion Mortgage,” said NRMLA President Steve Irwin. “While the HECM still accounts for over 90% of the market, we expect private-label reverse mortgage distribution channels to expand over time.”
The new home loan interest rates are linked to CIBIL score and start from 6.80 per cent for loans up to Rs 30 lakh and 6.95 per cent for loans above Rs 30 lakh, a bank release said.
By Press Trust of India | Posted by Srivatsan K C | Mumbai
PUBLISHED ON JAN 08, 2021 02:45 PM IST
State Bank of India on Friday announced an interest concession of up to 30 basis points on home loans and a 100 per cent waiver on processing fees.
The new home loan interest rates are linked to CIBIL score and start from 6.80 per cent for loans up to Rs 30 lakh and 6.95 per cent for loans above Rs 30 lakh, a bank release said.
Women borrowers will get a concession of 5 bps, it said.
“With an aim to offer attractive concessions to the home buyers, country’s largest lender SBI announces further interest concession of up to 30 bps on home loans and 100 per cent waiver on processing fees,” the release said.
The bank said interest concession of up to 30 bps is also available in eight metro cities for loans up to Rs 5 crore. Customers can also apply from the ease of their home via YONO App and get additional interest concession of 5 bps, the release said. “We are pleased to improve our concessions to prospective home loan customers up to March 2021,” the bank’s managing director (retail and digital banking), C S Setty, said.
The lender’s eligible existing home loan borrowers can also avail a paperless pre-approved top-up home loan through the YONO App, he added.
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A CIT Bank Savings account will help you boost your savings, earning 20 times more than what a traditional bank account will offer you.
If you have a regular checking and savings account at your local bank, you may notice that your rate on the savings account is less than a tenth of a percent.
You can keep your savings account at your local bank if you choose to. But you don’t have to.
Instead of getting crummy interest rates, you can switch to or open a CIT Bank savings account.
CIT Bank savings accounts are offered online, where you can earn a competitively high yield.
CIT BANK: AN OVERVIEW
In brief, CIT Bank is an online-only bank. That means, there is no local branch.
There are no ATMs. You will perform every transactions online. However, the bank does not charge its customers when they use another bank’s ATMs.
And if the bank charges you a fee, CIT will reimburse you up to $15 every month.
The bank currently offers some of the highest interest rates on its savings accounts and its other products, such as CDs, checking account and money market account.
Lastly, there no are no account maintenance fees on any of the bank’s products.
HOW MUCH CAN I EARN WITH A CIT BANK SAVINGS ACCOUNT?
With a CIT Bank savings account, you will earn a 0.95% APY through the Savings Builder option and 1.00% APY through Premier High Yield Savings account.
But certain conditions will apply (more on this below).
CIT Bank Savings accounts offers interest rates that are 20 to 25 times higher than what a traditional, brick and mortar bank is currently offering.
Because of that big difference between CIT Bank’s high-yield savings accounts between a traditional savings account, you’ll earn more money.
For example, if you have $5,000 in a traditional savings account with a 0.10 APY%, you would get just $5 in a year.
But if you have that same amount of money in an account earning 2%, you return will be $100.
CIT Bank offers two savings accounts options: 1) the Savings Builder and the Premier High Yield Savings account.
Both accounts require a minimum opening deposit of $100. But neither has monthly maintenance fees.
Here’s a quick table of CIT Bank two savings accounts.
CIT Bank Savings Account
$100 or $25,000
Premier High Yield Savings
The Savings Builder:
The CIT Bank Savings Builder will allow you to earn 0.95% APY, but only if you make at least one monthly deposit of $100 or more.
Or, if you keep a balance of at least $25,000. Interest in this high-yield savings account compounds daily to boost your earning.
Click here to learn more about CIT Bank’s Savings Builder.
The Premier High Yield Savings account:
With this account, you will earn 1.00% APY regardless of your account balance or monthly fees.
Interest in this savings account is also compounded daily to maximize your earning.
PROS AND CONS OF CIT BANK SAVINGS ACCOUNTS
No monthly fees on deposit accounts;
a minimum deposit requirement of $100;
Refunds ATM fees — because the bank does not have ATMs, it does not charge customers who use another bank’s ATMs. And if there is a fee, CIT will refund you up to $15 per month.
No bank branches or ATM;
No 24/7 customer support — as with all high yield savings accounts, most inquiries are handled online. While live telephone is available, hours are limited.
HOW TO OPEN A CIT BANK SAVINGS ACCOUNT?
To open an account, simply go to the CIT Bank homepage, and create the account online.
You’ll need to provide your name, address, phone number, and ID. You’ll also need to provide your social security number.
Note that CIT does not have any branches. Everything must be done online.
If you’re opening a CIT Bank Builder Savings account, you will need to make an initial minimum deposit of $100.
You will also need to make monthly deposit of $100 to take advantage of the 0.95% APY. Or, you will need to have a $25,000 balance.
If you’re opening the Premier High Yield Savings account, you’re not required to make any initial minimum deposit.
So, you can open the account first and fund it later.
HOW MUCH TO KEEP IN YOUR CIT BANK SAVINGS ACCOUNT?
How much should you keep on your savings account will depend on your savings goals.
If you’re opening the account to serve as an emergency fund, experts have recommended to keep at least three to six months of living expenses.
That money is reserved in case of an emergency like a loss of job, you fell ill, or need money for a major car repair.
But one thing you should know is that deposits at any banks are covered by the federal government up to $250,000.
So if you have more than that, you should split your money into multiple accounts.
WHO IS A CIT BANK ACCOUNT GOOD FOR?
A CIT Bank savings account is good for anyone who:
Wants to earn a higher yield on the savings accounts;
Does not mind having their banking online;
Can commit saving at least $100 every month; or
Can carry $25,000 balance.
WHAT OTHER PRODUCTS CIT BANK OFFERS?
In addition to the two savings accounts, the bank also offers a checking account, money market accounts and Certificate of deposits (CDs).
The checking account is called “eChecking.” It is the only account the bank offers. There is no monthly fees and you can open the account with as little as $100.
Note that CIT Bank does not have ATMs. But the bank does not charge you for using another bank’s ATM.
And CIT will refund you for ATM fees other banks charge you.
CIT bank also offers one money market account. This money market account has no monthly fees and requires an opening minimum deposit of $100.
CIT Bank has several terms CDs, which range from 6 months to 5 years.
There is also a no penalty 11-month term, where customers can withdraw money with no penalty.
CIT Bank also offers jumbo CDs, ranging from two to five years. You can open a term CD, including the no-penalty CD, with a minimum of $1,000.
The Jumbo CDs require a minimum of $100,000.
Click here to learn more about CIT Bank CDs.
THE BOTTOM LINE
A CIT Bank savings account, is a high yield savings account, where you can a higher yield than regular savings accounts.
You will earn a 0.95% APY through the Savings Builder option and 1.00% APY through Premier High Yield Savings account.
So, whether you’re saving money for an emergency fund, saving money to go on a vacation, or saving money to buy a house in the next few years, CIT Bank is the right bank for you.
Speak with the Right Financial Advisor
If you have questions about high interest savings accounts, you can talk to a financial advisor who can review your finances and help you reach your goals. Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
New York City renters are missing more than $1 billion in rent payments during the COVID-19 pandemic, The Wall Street Journal reported Thursday citing a survey conducted by the Community Housing Improvement Program (CHIP), a landlord trade group.
In the survey, the group measured the impact of the coronavirus crisis on New York’s rental market, particularly buildings subject to the city’s rent regulation laws. It found that around 185,000 households living in these apartments have failed to make their rent payments for more than two months – with an average debt of over $6,000.
These apartments account for roughly half of the total rental apartments, according to CHIP. And the rent debt from the rest of NYC’s apartment inventory is probably the same or greater, CHIP Executive Director Jay Martin told WSJ. This means that New York City tenants likely owe more than $2 billion in total rent debt.
“It’s not an insurmountable amount,” Martin said. “The numbers tell us that, probably, if we could get an additional billion or two dollars in the city, we could probably pay off every single renter’s arrears in the entire city of New York over the last year of the crisis.”
Read more: Rents are down nationwide, but is the decline of urban multifamily already over?
The New York State has received $1.3 billion in rental assistance from the pandemic stimulus package set aside by the federal government in December. Though it is still unclear how much money New York City will get – as well as how difficult it will be for renters to meet eligibility requirements – housing agencies will likely roll out their distribution plans for the new round of assistance in the coming weeks, according to WSJ.
Housing advocates, however, are concerned that if eligibility guidelines are too tight, much of the fund will sit unused as rent debts get out of hand. As of December, New York’s current rental assistance program had turned down more than half of renters’ requests for rent relief, leaving $60 million still unspent. Gov. Andrew Cuomo has signed an executive order expanding eligibility and extending the deadline for applications.
“It was structured in such a narrow way that it was hard for people to apply and so many were deemed ineligible,” said Rachel Fee, executive director of the New York Housing Congress, an affordable-housing group focused on budget issues. “How the state and city target the [new] program is going to be really important.”
During the pandemic, federal and state moratoriums have saved most delinquent New York tenants from evictions. Cuomo has extended the state’s eviction ban until May 2021. Some landlords, on the other hand, have fallen behind on their mortgages and other obligations as they struggle to collect rent.
New York’s rent remains high by national standards despite many neighborhoods dropping their asking rents during the pandemic. In New York City, the median rent price for a one-bedroom apartment is $2,350, according to listings website Zumper.
Banks and housing finance companies (HFCs) have been able to offer home loans at rates starting from 6.75-6.9 percent a year. Existing home loan borrowers servicing their home loans at much higher interest rates may consider transferring their home loans to other lenders at lower interest rates and/or better service terms. However, the decision of switching your existing home loan to another lender has to be a well-thought-out one after considering some key factors.
Overall savings in interest cost
In most cases, the primary objective behind opting for a home loan balance transfer is reduction in the overall interest cost on the outstanding home loan amount. Availing the balance transfer option is especially helpful for existing borrowers who initially took the loan at higher interest and are now eligible for a much lower rates owing to their improved credit profiles. The lower interest rate availed on exercising home loan balance transfer (HLBT) results in reduced overall interest pay-out on your existing home loan, without impacting your liquidity and existing investments.
However, before switching to another lender, remember that your balance transfer request will be considered as fresh home loan application by the new lender and, hence, attract processing fee, administrative and other charges levied at the time of processing of new home loan applications. This makes it crucial for you to calculate the overall savings in interest cost after factoring in such charges. Go ahead with the balance transfer option only if the overall interest saving is significant enough after factoring in the costs involved.
Additionally, while opting for HLBT, borrowers can consider the home loan overdraft option, a home loan variant, if offered by the new lender. In this option, an overdraft account in the form of a savings or current account is opened and linked with the home loan account. The borrowers can deposit their surplus funds in the overdraft account and later withdraw from it in case of urgent needs. The balance of this overdraft account is deducted from the outstanding loan amount while calculating the interest component, which will further reduce the interest cost. This home loan variant allows borrowers to avail the benefit of making prepayments while conserving their liquidity.
Scope ofrenegotiation with existing lender
Before applying for a home loan balance transfer, try to negotiate with your existing lender regarding the interest rate and/or other terms and considerations. If your existing lender refuses to accept your request for reducing the interest rate and/or providing better terms of service, you can go ahead with switching your lender by opting for HLBT. Keep in mind that when you apply for balance transfer, the new institution would impose its own set of terms and conditions on the transferred loan. Before you finalize the new terms, you can also use the balance transfer to either avail a larger loan amount in the form of top-up loan, or reset your loan tenure.
Also read: Still paying high interest on your home loan? Switch banks for lower EMIs
Residual loan tenure
It’s generally not advisable to opt for home loan balance transfer during the later stages of the tenure, as borrowers must have paid the majority part of their interest component during the earlier stages of the tenure itself. This implies relatively lower scope of significant overall interest cost savings during later stages.
For example, if you transfer an outstanding home loan of Rs 50 lakh with a current interest rate of 8.5 percent annually and residual tenure of 20 years to another bank offering 7.25 percent a year for the same tenure, you will get total savings of close to Rs 9.29 lakh over the entire tenure. On the other hand, if you transfer the home loan with the same outstanding loan amount but with residual tenure of five years to another lender at 7.25 percent, your total savings would be just Rs 1.79 lakh.
Irrespective of the stage of the loan tenure, try to keep the tenure upon switching lender the same as the remaining tenure of your existing home loan. This saves you from the burden of paying increased interest cost, which you would have paid in case you opted for a longer tenure than the original residual tenure of the transferred home loan. Opt for an increased tenure only if you wish to reduce your EMI burden along with balance transfer. However, as longer tenure implies higher overall interest cost, try to prepay loan whenever you have surplus funds.