Mortgage, loan and property. What is a mortgage?


A mortgage is putting a property as a guarantee to a lender as a security for a mortgage loan.

While a mortgage in itself is not a liability or a dept, it is evidence of a debt. It is a transfer of an interest in property, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the property when the terms of the mortgage have been satisfied or concluded.

In other words, the mortgage is a guarantee for the loan that the lender makes to the borrower. In all but a very few states, a mortgage creates a lien on the title to the mortgaged property.

Thursday, June 5, 2008

OECD predicts a sinking growth and a 10% drop in home prices by the end of 2009

The U.S. growth will "almost wedge" by the end of 2008 and it will even fall in the red in the second quarter, said Wednesday the OECD in lowering its forecasts again.

It has revised its growth forecast to 1.2% for 2008. In March his chief economist Jorgen Elmeskov had said that growth would be 1.4%.

Growth is expected to become negative in the second quarter to -0.5%, before returning painfully over the red line +0.7% in the third quarter and +0.2% in the fourth.

"The gross domestic product (GDP) is expected to sink further until the end of 2008, despite the positive contribution of the trade balance," says the Organization for Economic Cooperation and Development (OECD) in its biannual report forecasts.

The job market has deteriorated for five months in a row, "a trend that in the past has coincided with the start of recessions," says the report.

The OECD is quite pessimistic about the housing market and predicts a 10% drop in home prices by the end of 2009. This should cut consumer spending already being hurt by soaring prices of raw materials like gas and food.

Moreover, "the tightening of credit conditions, coupled with stagnant incomes and declining confidence, is likely to weigh heavily on household spending," said the OECD.

As for inflation, the organization expects an increase of 3.2% this year and 2% next year.

It recommends to the Central bank to leave its key interest rate unchanged, currently set at 2%, "until the recovery is installed."

"But interest rates should be raised quickly once conditions are normalized," the report added.