Real estate market

Web portals are as guilty of making extra profit on your loan as any loan originator on the street.  If you search for a loan on the web, you will run into two different types of companies.  One is a list broker.  They are not in the mortgage business.  It is their job to persuade [...]

Now, let me tell you the secret no broker or bank wants you to know.  Almost every loan has at least 2% (or 2 points), and more often than not, 3% in it for the broker or bank as the mark-up/profit. (This is a good time to toss in a little industry lingo).
A point refers [...]

Profit is made when the loan moves from retail to wholesale.  The mark-up or profit on a loan originated by a broker is made when the loan closes.  This extra amount is on the settlement sheet and paid directly to the broker.
The mark-up/profit on a loan originated by a bank is made when the bank [...]

The HJM framework has the advantage that it allows seamless extension from one to several sources of uncertainty. The choice of number of volatility factors to use is driven by a number of often conflicting considerations. Additional sources of uncertainty introduce additional degrees of freedom to the evolution of the term structure which allows decorrelation [...]

Principal component analysis (PCA) may be performed on a time series of historical term structure data in an attempt to identify the dominant factors driving its evolution. PCA produces factors maximising successive contributions to overall variance. Hence these factors attempt to explain the diagonal of the covariance matrix. The resulting factors are surrogate volatility factors [...]

Calibration to historical data could be performed in a manner similar to that described for implied volatility data. First a specific formulation of the HJM model is chosen, that is a specific volatility structure is imposed by specifying the number of volatility factors and their specific functional form. Time series of historical term structure data [...]