Mortgage Rates Inch Up
Mortgage interest rates continue to teeter the monumental 5% mark and the demand for mortgage refinancing continues to rise. One problem for most loan applicants is that they do not qualify because conventional and FHA mortgage guidelines have tightened to the point that only a small percentage of borrowers qualify for home refinancing or new home loans. The financial crisis and Great Recession have their roots in the housing bust. When it comes, a lasting recovery will be evident in a housing rebound. Unfortunately, housing appears to be weakening anew.
Housing figures released last week show that after four months of gains, home prices flattened in October. At that time, low current mortgage rates courtesy of the Federal Reserve and a home buyer’s tax credit (courtesy of Congress) were fueling sales. That should have propped up prices. But it was not enough to overcome the drag created by a glut of 3.2 million new and existing unsold single-family homes — about a seven-month supply.
The situation, we fear, will only get worse in months to come. Rates already are starting to rise as lenders brace for the Fed to curtail support for mortgage lending as early as the end of March. The home buyer’s tax credit is scheduled to expire at the end of April. And a new flood of foreclosed homes is ready to hit the market. It is increasingly clear that the Obama administration’s anti-foreclosure effort which pressed mortgage lenders to reduce interest rates — isn’t doing nearly enough. High unemployment rates also mean that many borrowers who did qualify for aid have been unable to keep up with even reduced monthly payments.
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