A sneak peek into the mortgage trends - Will the low rates resurrect the housing market?
Extreme chaos in the stock
market indexes and the debt issues in the US have meant a corresponding
rise in the bond prices and that has pushed yields to its record lows.
However, the burning question in the minds of most housing experts is
whether or not the record low mortgage rates will uplift the beleaguered
housing market. The housing experts and the Mortgage Bankers Association
are of the opinion that the record low rates of the mortgage loans will
be gone in 2011 as the rates are mostly expected to rise gradually by
the end of 2011. In 2010, there was some good news among the US homeowners
as there was a staggering increase in the number of homeowners who have
fallen back on their monthly mortgage payments. Let’s have a look
at the mortgage rates that have ruled the US housing market since the
3rd quarter of 2010.
Mortgage market conditions in the 3rd quarter of 2010 - More buyers or more sellers? In the third quarter of 2010, it had been seen that record low interest rates and the buyer tax credits had lead to a sharp increase in the number of home buyers than home sellers. 44% of the real estate agents reportedly were of the opinion that the number of buyers slightly pulled ahead of the number of sellers in the housing market of the US in the second-last quarter of 2010. The low rates on the mortgage loans were clearly a result of the slow but strengthening economy that was gradually beginning to stabilize after the after-effects of the global economic recession. The mortgage rates in the 3Q of 2010 were historically low and that is why this was the best time for all the prospective homebuyers. |
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Predominant rates in the 4Q of 2010 – Was housing more affordable?
Just after the low mortgage
rates in the 3rd quarter of 2010, there was a slight decline
in the home prices in the 4th quarter of 2010 and this meant
a happening market for all the first-time homebuyers who could only
afford to buy an entry-level home. In California, the number of homeowners
rose to 69%, as compared to a 67% in the 3rd quarter of 2010
and 64% earlier.
Reports from the California Association of Realtors show that 83% of the first-time homebuyers were able to purchase an entry level home that was worth $139,000 and all such homeowners needed a minimum household income of $22,000 to qualify for such a house.
1st Quarter of 2011 – Are the mortgage interest rates slightly rising?
By the last month of 2010, the mortgage interest rates were nearly at 5% but surprisingly, the rates ranged from 4.75% to somewhere above 5% in the very first quarter of 2011. Most home sellers in the US took to concern the rising mortgage rates on the first quarter of 2011 and they considered the constant change in the interest rates before taking any plunge. Even a slight change from 5% to 5.25% in a 30 year mortgage loan for $200,000 would mean a change of $30.78 per month in the monthly mortgage payments and $47.14 for a loan worth $300,000. Is this a sign that mortgage rates are moving up?
Mortgage rates fell to record level in the 2nd quarter of 2011 – Will this revive the market?
As the 512-point drop in the Dow Jones Industrial Average, the US economy is still in despondency and the possibility of the double-dip recession will soon require to be driven out. As per reports of Freddie Mac, the 30 year fixed rate mortgage averaged around 4.39% and this figure is down from 4.49% during the same time in the year 2010. The 15 year fixed rate mortgage averaged at 3.54% down from 3.95% during the same time last year. That’s good news enough for all those who are looking to buy a new home in 2011!
Getting the best mortgage loan – Are you up for the challenge?
Though homeowners and the prospective buyers are rejoicing in the present low-rate environment, yet it would be needless to say that getting a mortgage loan won’t be as easy as it was in 2005. Check the following things to know whether you’re up for the challenge.
- Your credit score: Lenders will be tight-fisted when you apply for a mortgage loan with poor credit score. Boost your credit score to grab the best loan in the market.
- Reduce your debts: The lenders will also check your debt-to-income ratio before lending you a mortgage loan. Reduce your debts and pay them off to make sure that you place your hands on a loan with an affordable rate.
- Down payment: Save enough money to make the required down payment so that you need not pay PMIs that will unnecessarily boost your monthly payments.
The performance of the US Treasury market will tell you which way the mortgage rates are heading. If you’re in the market for getting a mortgage loan, study and analyze the mortgage interest rate trends to take an informed and measured decision.
