Archive for the ‘Mortgage Rates’ Category

After dipping to an almost three-decade low, mortgage interest rates are rising again, with rates for 30-year fixed mortgages pegged at 4.35% as of September 9. This represents the first weekly increase in rates since the middle of June. The figure is up from the previous week's average rate of 4.32%

Despite record declines in previous weeks, loan rates were not able to contribute much to the improvement of the country's housing market. And now that rates are climbing back up, most analysts have become even less confident of any significant recovery in the housing market. However, they stated that a rise in mortgage rates will also not cause a drastic crash in the property market.

Market analysts have stated that more than the rates of mortgages and bargain home financing, it will be the issue of unemployment that will decide whether the housing market will rebound or continue to sink. They explained that the residential property market is not being hurt by rates of mortgages, but by the lack of homebuyers and lack of confidence in the industry which are largely due to the high number of people who are unemployed and the continuous downturn in the national economy.

More than anything else, market observers believe that people's fear of losing their jobs is the greatest factor behind housing market performance. This is evident in the fact that even when mortgage interest rates are at their lowest, homebuyers and investors still stayed away from the market.

Rates have continuously declined since spring, mainly because investors are putting money into Treasury bonds, causing Treasury yields to decline and consequently leading to lower rates. Even during the period when the lowest rates were recorded, sales of homes were declining. The National Association of Realtors has reported that sales for July of previously occupied dwellings dipped by 27%, producing the worst month of performance for the category in 15 years.

Housing market analysts have stated that even if home prices continue to decline and mortgage interest rates return to record lows, the housing market will not be able to recover until buyers decide to pluck properties out of the market. And this will only happen if unemployment rates are cut into manageable levels.

A sudden increase in mortgage rates has caused home mortgage refinancing to drop. In the past weeks, mortgage rates have gone up to around 4.91 percent. This has then caused the slowdown in the refinancing area, after it has been speeding up in the past months.

Homeowners who had opportunities to lower their home mortgage rates now have more cash on hand, and this caused spending to increase generally.

According to Ben Bernanke, the Federal Reserve’s current head, the lower mortgage rates can be considered as green shoots, the first signs of an economic recovery. As mortgage rates start to climb up again, mortgage refinancing applications decreased by around 20 percent. Before this happened, applications were increasing continuously for five consecutive weeks. The drops in applications are an indicator that consumers have less spending power. This also translates to bad financial situations for homeowners.

In April, mortgage rates dropped to 4.78 percent. This was caused by the announcement of the Federal Reserve that it would buy around $1.25 trillion worth of mortgage securities, and $300 billion worth of Treasury notes. After this announcement, rates went down and led to the increase in mortgage refinancing. After this, the next worry came as to how much the Fed would buy up and what this means to interest rates and yields of the Treasury.

Last week, Treasury notes increased to a six-month high in terms of yields. This was seen as highly important, since mortgages rates are dependent on the return rates in the Treasury. Some experts worry that the debts of the government would have bad effects on the real estate industry, the one seen as the key and major factor for the recovery of the US economy.

A way to push rates down is to buy Treasurys that are more long term. However, this is seen as a temporary solution and would even create some other problems. This can even lead to inflation and could further weaken the already weak economy of the country.

In the long run, federal debt is very crucial to mortgage rates. Quick fixes would create lower rates and would help some homeowners, but in the long run would cause a lot of negative effects on the economy and on consumers as a whole. Home mortgage refinancing would then be more difficult than as it is now.

At this time when interest rates are continuously decreasing, a lot of homeowners are considering to get a fixed rate home mortgage. However, there are some information you need to know before you shift from one mortgage to another. As you weigh your options in getting the best mortgage deals, it is important for you to get educated.

First of all, how are the interest rates falling? At present, the interest rates for home mortgages are at their lowest in 300 years. The fall in interest rates started around six months ago, and now, mortgage repayments have fallen to a very little amount than how much these were a year ago.

A fixed rate home mortgage, on the other hand, is agreeing to pay a certain amount for a set number of years. Financial experts recommend getting a fixed rate mortgage as it provides more certainty and stability for borrowers.

However, it is also recommended to get a new mortgage deal only if you have reached the conclusion of your existing home mortgage. This is because getting out of a mortgage deal that has not reached its conclusion yet will result to an expensive early redemption penalty.

If you choose to get a fixed rate home mortgage, you will probably not see its benefits at a short time. However, its advantages would best be seen in the medium term and in the long run. This is because interest rates can still increase in the future, so getting a fixed rate mortgage will secure your loan and the interest rate that you are currently paying.

If you have bad credit rating, it can be beneficial for you to get a fixed rate home mortgage. This is because a fixed rate mortgage can keep your repayment at a low rate for the coming years. This will help you improve your credit scores.

Finally, it is recommended to get a home mortgage broker to help you get the best deal. Although it will cost you 1 percent of your total home mortgage cost, it will surely be better and would in fact help you save more as your repayment can be at its lowest. However, it is important to get an independent broker instead of a tied one, as a broker that is connected to another institution would have fewer choices and options for you. Invest in an independent home mortgage broker.