CMPS Financial and Housing Markets 5

Question 1

What is the purpose of the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey?

Accepted Answer

To provide a leading indicator of home sales and refinancing activity

Answer

The MBA's weekly survey tracks the volume of mortgage applications, giving market participants an early read on future home purchase closings and refinancing trends.

Question 2

How does the Community Reinvestment Act (CRA) relate to housing market dynamics?

Accepted Answer

It requires federally regulated banks to meet credit needs in all communities, including low- and moderate-income areas

Answer

The CRA mandates that banks serve the credit needs of their entire assessment area, including lower-income communities, influencing where and to whom mortgage capital flows.

Question 3

What is the primary driver of 'cap rate compression' in commercial real estate markets, and how does it relate to residential mortgage planning?

Accepted Answer

Falling interest rates driving investors to accept lower yields; it reflects the broader low-rate environment that also reduces residential mortgage rates

Answer

Cap rate compression occurs when low rates push investors into real estate at lower yields; the same low-rate environment drives down residential mortgage rates, making both markets interrelated.

Question 4

Which of the following best explains why housing is considered a 'cyclical' industry?

Accepted Answer

Housing demand and construction activity are highly sensitive to economic conditions, interest rates, and credit availability

Answer

Housing is cyclical because buying decisions, construction activity, and credit standards all fluctuate with broader economic conditions, making the sector expand and contract with business cycles.

Question 5

A CMPS advisor notices that 10-year Treasury yields have risen 75 basis points over 60 days while the Fed has held the federal funds rate steady. What is the most likely cause?

Accepted Answer

Bond market investors are pricing in higher future inflation or stronger economic growth expectations

Answer

Long-term Treasury yields can rise independent of Fed action when the bond market anticipates higher future inflation, stronger growth, or increased Treasury supply — all reflected in investors demanding higher yields.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS Financial and Housing Markets 5