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First, we need to understand exactly what is happening in the mortgage lending industry – and then we’ll tackle why it is going on. So many real estate professionals, homeowners, investors and business-savvy individuals are dumbfounded at the historically low level of mortgage interest rates available on the market today. We are talking about rates that have not dipped this low since the 1950s!
What’s Going On In the Mortgage Industry?
What types of rates are we seeing in the market today? Well, for starters, the 15-year fixed rate loans that many savvy homeowners of existing homes are tapping into for refinances are yielding incredible rates as low as the low 3’s. Thirty-year fixed rate mortgages are available to qualified buyers at rates that are in the low 4’s. Depending on the amount of money put down on the property, income and credit status plus other factors that lenders are cracking down on, the rates can fluctuate up or down. There is no way to tell whether this decline in rates will continue or whether as we dip into yet another recession we witness even more volatility in the market, but there certainly is speculation.
Why Is All This Happening?
As the economy continues to alarmingly dwindle in both the US market and Europe, US Treasury bond yields remained low resulting in a decline in mortgage rates for two weeks in a row. Regardless of the low rates however, in light of the economic downturn, the number of new home purchases is dismal. The majority of loans being taken out tapping into the historic rates has been refinance applications; as much as one fifth.
Your Last Chance to Refinance
If you are currently in a home, this may be your last chance to refinance while getting such incredible rates on your mortgage. As the mortgage industry continues to tighten its belt and implement stricter guidelines to approve applications, it is essential for you to meet with a mortgage professional to ascertain whether refinancing your existing mortgage is an option for you. It can result in savings as much as about $1,800 each year on extra finance charges.
Potential Homebuyers and Investors Have It Made
This could not be a better time to invest in a new home, whether as your primary residence or as an investment property. With housing prices as low as they are coupled with the unprecedented low interest rates, this is a buyer’s or investors golden opportunity. As anyone in the real estate industry knows, just a few years after such a bust – things usually do stabilize and when they stabilize property values will jump back in the right direction. The best part of this scenario is that the interest rates left behind and locked in will be the incredibly low rates we are seeing today.
Things Are Looking Up
Anyway you look at it, as long as you can endure the sometimes grueling and often difficult mortgage application process these days, it is definitely worth it. There was a 21% increase in new home sales from August 2011 versus August 2010, marking a notable and promising positive trend. Clearly the outlook is slowly going in the right direction.
At the end of the day, you have to give something to get something and despite the growing concerns over our economic outlook both in the US and in Europe, home sales are happening and people are able to avail the amazing opportunity that is presenting itself in light of these historically low mortgage interest rates. At the very least, every homeowner should visit a mortgage professional to learn what, if any, options there are in their particular situation with which they can potentially come out on top through this whole episode.
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