The trend of subprime lenders entering the insured prime mortgage market continues. Abode Mortgageannounced last night that it will be the newest competitor offering mortgages to “A’ clients.
Xceed and Street Capital recently made pushes of their own into the prime space.
Abode’s goal is to diversify their business model and make up for diminishing opportunities in the subprime market. A rising cost of funds has squeezed profits and cut funding sources for many subprime lenders.
Abode plans to compete with decent rates (5.79% on a 5-year fixed as of today) and “service, service, service.”
What does this mean for borrowers? If you’re credit is good, more competition in the prime mortgage space often means better rates and terms.
In any case, we wish Abode well with their new strategy. Hopefully it also helps their stock price. If their prime products don’t sell, or they incur further losses, $0.11 a share could be expensive. If they execute their strategy well, the stock could prove a bargain.
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