Refinance Mortgage Loans as Rates Fall Below 5 Percent Again
Refinance mortgage loans now as rates fall below 5 percent again.
According to the Mortgage Bankers Association, rates for fixed-rate 30-year mortgage loans dropped below 5 percent – the first time rates fell sharply over the past 4 weeks.
The MBA also reported that the volume of mortgage loan and refinancing applications rose during the week ended October 30 by 8.2 percent to an adjusted index of 608.3 because of the drop in mortgage rates.
MBA officers explained that the 5-percent level has become a significant point among consumers, sparking home loan and refinancing applications if rates fall below it and temporarily slowing down loan applications if rates rise substantially above it.
The struggling housing market has been showing some signs of nearing stability after three years of decline, but it is still vulnerable to movements in other areas of the economy.
Ronald Temple, research co-director at New York-based Lazard Asset Management, said that it is still too early to pronounce a recovery in the housing market and it is still difficult to determine if the federal government’s intervention in the market has been effective.
Temple explained that large numbers of foreclosures will still enter the market over the coming months. He added that although currently, rates are attractive, pushing many borrowers to refinance mortgage loans and buyers to take out home loans, mortgage rates will likely increase.
Meanwhile, the National Association of Realtors said that pending sales of existing homes in September increased to their highest point in almost three years largely due to the expiration of the first time buyer tax credit at the end of November. The $8,000 federal tax credit, however, is likely to be extended based on statements from legislators over the past weeks.
According to several U.S. representatives, they will likely support a Senate proposal to extend the tax credit program through April next year. They recognize that the federal tax credit has been contributing significantly to the reduction of foreclosure homes in the market and the rejuvenation of home sales.
Additionally, the Federal Reserve assured the public that it will continue to focus on keeping home loan rates low so more Americans can buy homes or refinance their loans.
Based on MBA data, the number of borrowers who submitted loan refinancing applications increased by 14.5 percent to an adjusted index of 2,693.7 as rates were kept below 5 percent to encourage borrowers to refinance mortgage loans.
