Goldman Sachs
predicts mortgage rates will stay low, partially due to low demand.
Don Grafues
Resource: REALTOR.org
Mortgage rates are at a low not seen for many years. Yet many of us are unable to capitalize on the rates by refinancing.
According to
The Wall Street Journal approximately 37% of borrowers with 30 year fixed loans have rates 6 percent or higher.
The obstacles to refinancing are significantly lower home values, lower wages and tighter (self imposed) lending requirements. As the article states, the people who can refinance are the ones who need it the least.
Don Grafues
Resource: The Wall Street Journal
Freddie Mac’s
weekly survey of rates shows a decline in 30 year fixed loans.
30 year fixed loans averaged 4.97 percent with 0.7 points for the week ending March 4. The week prior average was 5.05 percent and the same period a year ago was 5.15 percent.
The 15 year fixed rate was 4.33 percent, also with 0.7 points.
Don Grafues
Resource: FreddieMac
Rates on 30 year fixed mortgage rose slightly last week going above the 5 percent level. 30 year average was 5.05 percent, 15 year fixed rates were up a bit to 4.40 percent.
Don Grafues
Resource: REALTOR.org
The Mortgage Brokers Association made a proposal last Wednesday to help the unemployed keep their homes. The proposal is for mortgage servicers to lower mortgage payments to 31 percent of household income for nine months. The amount of the reduction would be added to the end of the mortgage.
The Treasury would make loans available to the servicers to make up the amount of the reduction. This would keep the holder of the mortgage intact.
A concern is that nine months will not be sufficient as finding work in nine months is very optimistic.
Treasury needs to give it approval for this program to be implemented.
REALTOR.org printed an
article in which Todd Zywicki, a George Mason University law professor, argues that fraud was not the culprit of the housing meltdown. And his ideas are easily understood.
A simplified version of what happed is as follows;
- From 2001 to 2004 the Fed kept interest rates very low making adjustable rate mortgages very attractive.
- While these loans turned out to be risky, at the time homebuyers were making a smart decision to take advantage of these attractive, low cost loans.
- Once the Fed began raising interest rates, the adjustable rate mortgages began adjusting making it difficult for some home owners to continue making payments and they defaulted on their mortgage.
- As foreclosures increased, prices were driven down putting more people in an “underwater” situation.
This cycle of lower home values resulting in more defaults resulting in more foreclosures became perpetual, requiring extraordinary action to break the cycle.
Don Grafues
Resource: RALTOR.org
The FED does not raise rates. This will help keep mortgage rates low.
Freddie Mac reports a slight lowering of interest rates last week.
- 30 year fixed averaged 4.93 percent.
- 15-year fixed loans slipped to 4.33 percent.
- 5-year ARM dropped to 4.12 percent.
- 1-year ARM moved to 4.23 percent.
Don Grafues
Resource: Freddie Mac & REALTOR.org
