Fixed Mortgage Rates went up for the first time since the feds bought a huge amount of long term treasuries to lower them. Mortgage Rates had been at a 50 year low since last week. That led to a spike in mortgage applications. The Fed has been pushing hard to help boost new home sales and the economy in general. Their boost to lending "should make new consumer, business, and mortgage loans more available, at lower cost," Bernanke said in Pheonix, AZ on March 20th while attending a banking conference. The Fed plans to buy up to 300 billion dollars of these long term treasuries, an all time high. Though new home purchases suprisingly rose February the median sales price dipped 18% across the US, that's a record. Former mortgage broker and rate expert Bill Gates says this, "now is a great time to take advantage of the rates. Some big banks should be announcing unexpected profits and investors will take their money out of the safe havens and put it back into the market driving treasuries which move in the opposite direction of mortgage rates down and mortgage rates up." It's not easy to refinance now and the process can take longer than 30 days which is a standard lock period; therefore, it's a great idea to get working with your bank of choice now so that they can get a head start on underwriting. What happens a lot of times if a lender does not get a loan underwritten within the 30 days they charge the customer points to extend the rate lock. That causes all types of problems. I suggest floating the rate to begin and once the loan has been approved by an underwriter lock it at that time. That will put the odds in your favor that your loan will be funded before the 30 day rate lock expires. Appraisals have been an issue in most areas across the US due to the horrible housing market. If you can find a bank willing to pay for your appraisal that's the way to go. That way you avoid paying upwards of $350 for an appraisal that is no good as far as your mortgage lender is concerened".
Mortgage Rates had been at a 50 year low since last week. That led to a spike in mortgage applications. The Fed has been pushing hard to help boost new home sales and the economy in general. Their boost to lending "should make new consumer, business, and mortgage loans more available, at lower cost," Bernanke said in Pheonix, AZ on March 20th while attending a banking conference. The Fed plans to buy up to 300 billion dollars of these long term treasuries, an all time high. Though home purchases, new homes mostly rose in February the median sales price was way down. Former mortgage broker and rate expert Bill Gates says this, "now is a great time to take advantage of the rates. Some big banks should be announcing unexpected profits and investors will take their money out of the safe havens and put it back into the market driving treasuries which move in the opposite direction of mortgage rates down and mortgage rates up." It's not easy to refinance now and the process can take longer than 30 days which is a standard lock period; therefore, it's a great idea to get working with your bank of choice now so that they can get a head start on underwriting. What happens a lot of times if a lender does not get a loan underwritten within the 30 days they charge the customer points to extend the rate lock. That causes all types of problems. I suggest floating the rate to begin and once the loan has been approved by an underwriter lock it at that time. That will put the odds in your favor that your loan will be funded before the 30 day rate lock expires. Appraisals have been an issue in most areas across the US due to the horrible housing market. If you can find a bank willing to pay for your appraisal that's the way to go. That way you avoid paying upwards of $350 for an appraisal that is no good as far as your mortgage lender is concerened".
If rates rise it will not be by much. Rate will not eclipse the 6 percent level for a long time. Too many US dollars are tied up in treasuries.
Copyright (c) 2009 Edward Ferrara
Inflation worries, lead by reports of a jump in consumer spending November along with a rise in inflation during the same period, have caused major lending institutions to raise their 30-Year mortgage rates to above 6 percent. The average rate rose to 6.17 percent in some markets, compared with less than 5.96 percent just three weeks ago.
Analysts points to the worry about inflation being a major factor in the rise of long-term bond yields over the past week, which has a direct effect on mortgage rates. Many of the same analysts are also predicting a major slowdown in consumer spending in the months to come as the worry over the housing market and credit markets persist.
Much of the reason that the housing market is in such a slump is due to the fact that sub-prime credit is becoming harder to obtain in many markets. This has led to a glut of housing on the market and is expected to worsen as the credit market continues to further pull back on the reigns of lending to at-risk individuals. Many credit analysts predict that further concerns over inflation and consumer debt will lead to even tighter credit standards being adopted by many of the major lenders.
Following almost five years of heavy activity in the housing market, a severe slump is now underway in all segments of the market. Sales have become weak and home prices have fallen substantially, with the largest decline in home sales in 12 years taking place in November. Home sales were down almost 9% since the same period last year, and an astounding 34.4% compared to 2005.
Further adding to the upwards pressure on mortgage rates are increasing concerns about foreign housing markets. The UK housing market fell for the second straight month in December, with housing prices falling 0.5%. This brought the annual growth rate down to around 4.8% which represents the weakest growth in almost two years. Housing and credit worries lead the Sterling to reach a new record low against the Euro in late December.
There is also growing concern in the UK that the country is also heading for a recession, a similar concern that is echoed in the US. Many analysts do not expect the housing crunch to ease in 2008 and are worried that the credit crisis taking place in the US could also have negative effects on the UK. While the sub-prime market is causing much of the downward pressure on the market in the US, affordability concerns are leading the UK housing market worries.
With the grown concern of the credit crunch in America and abroad, sales are not expected to rebound before 2009. Meanwhile, mortgage issuers are trying to protect their financial assets and take on less risk which is leading to higher mortgage rates, especially for long-term loans. Given the current backlog of housing on the market, it would take 9.3 months to clear the glut from the pipeline according to industry experts.
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