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Mortgage Rates at Record Lows
Last week, Freddie Mac announced that rates on a thirty-year fixed dropped under five percent. Levels have not been this low in nearly
forty years and have been falling for eleven consecutive weeks. All the news has many qualified homeowners looking to refinance.
Once the Federal Reserve said they would be begin buying up to five hundred billion dollars of mortgage-backed securities, interest rates began falling
almost instantly. From there, qualified homeowners were looking to refinance prompting a more than twenty five percent increase in refinancing.
Although it is expected to have a slower effect on the amount of new mortgage applications, the falling interest rates have still managed to spur
a recent jump in new home purchases. It is hard to predict, as of now, mostly due to the fact that the market does not usually begin to pick up until
the end of February.
Refinancing is not as easy as it has been in the past. With lenders tightening their standards, even people with good credit are not immune to feeling the effects. Many
mortgage brokers are being flooded with calls from homeowners wanting to refinance. One problem that some homeowners are having is the fact that
their home has dropped so much in price that they have less equity in it.
Banks are also taking a much more in depth look at the prospective homebuyers income and things like sales of stocks as a form of
income will no longer be accepted. FICO scores have to be a minimum of six hundred eighty and subprime loans have pretty much gone the way of the dodo bird.
Funding capacity may also be strained from the jump in refinancing. This has many lenders offering the lower rates at certain times of the day. As
banks are sometimes changing rate quotes several time throughout the day.
Marin Real Estate Blog
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