Loans Market

Updated at: 7:57 PM.
Under Category: Loans
Loans Market is primarily a platform where lenders and borrowers come together to carry out credit transactions. The amount of the loans market in a country affected by several factors, including general economic scenario, inflationary pressures and interest rates on commercial loans.

Loans Market Classification

The Loans Market can be broadly divided into:
Primary Loans Market

It is the market where lenders make loans directly to lenders. The primary loans market is very volatile, as it is affected by the MMR, such as Prime Rate and Fed Fund Rate.

The rates offered in the primary Loans Market is not constant for all individual borrowers. Actually it depends on a number of factors, including:

* The risk of default on the loan: Borrowers who certainty generally able to get a lower interest rate because it reduces the risk of default.
* The size and stability of the income of a borrower: People who work in volatile areas normally qualify for loans with higher interest rates and stricter payment terms.
* The size of monthly loan payments: Borrowers who agree to establish larger monthly payments are able to take advantage of lower interest rates.
* Loan maturity: Long-terms into Loans Market as a mortgage and education loans, tend to lower interest rates than short-term products, such as personal loans.

Secondary Loans Market

It is the market where banks and financial institutions to sell existing loans to mortgage leads, institutional investors and other lenders. Lenders can sell the loan products in the secondary loans market for the following reasons:

* This increases the resources for new loans.
* It helps the lender to transfer the risk of default on a loan to a second party (buy bonds on the secondary market).

The secondary Loans Market in the U.S. consist mainly of:

* Federal National Mortgage Association (FNMA)
* Government National Mortgage Association (GNMA)
* Federal Home Loan Mortgage Corporation (FHLMC)

Moreover, the syndicated loans are a specialized segment of the loans market. Syndicated loans offered by a group of lenders. This is intended to write operations or loss of a lender to finance. Syndicated loan agreement is structured and managed by a separate promoter, usually a commercial or investment bank.

Loans Market
, was posted by: , Sunday, February 12, 2012, at 7:57 PM under category Loans and permalink Id 5.888.
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