Mortgage rates fell to record lows once again last week. While it’s certainly not breaking news at this juncture, it goes without saying that with every new venture into record-low territory, at least some qualifying borrowers are getting the opportunity of a lifetime.
Borrowers that purchase or refinance at current mortgage rates may never have to refinance to a lower rate ever again.
It’s always puzzling why more mortgage borrowers don’t fill out loan applications when mortgage rates are historically low and still falling. In this current low-rate environment, there are, however, the usual suspects that keep borrowers on the sidelines:
1. Borrowers want to wait and see how low mortgage rates will actually go before they start rising again.
When will the real estate downturn end? According to a new study by RealtyTrac and Trulia, most Americans surveyed believe that a market which has been in the dumps since April 2007 is likely to remain depressed until 2014. That would mean a seven-year drought on the real estate front, something truly of biblical proportions.
What makes the study interesting is that questions asked in November 2010 were asked again in April 2011. The changing perception of the marketplace is apparent–the hope for a quick resolution of the housing crisis has now evolved into a belief that we will remain firmly stuck in slow gear, despite current mortgage rates which are near historic lows.
Current mortgage rates for 30-year fixed rate loans are still at historic lows. Granted, they may not be as low as they once were, but in the grand scheme of things, these mortgage rates are still fantastic. That said, borrowers looking to land an even lower mortgage rates are considering adjustable rate mortgages (ARMs).
Would you be better off with an ARM, even though current fixed-rate loans are not far from their rock-bottom lows?
I want to examine three separate issues that could possibly kill refinance demand entirely: Underwater homeowners, a requirement in the proposed definition of a qualified residential mortgage (QRM) and mortgage rates.
Underwater borrowers = No refis
At some point down the line when we look back over the last year or so, I believe the resounding (cynical) memory will be that, for the most part, this era of historically-low mortgage rates was wasted on a potential pool of homebuyers and refinancers that either a) didn’t take advantage; or b) couldn’t take advantage of the lowest mortgage rates in decades.
Last year, many mortgage market analysts didn’t think mortgage rates could go any lower. After reaching 50-plus-year lows, the expectation was for mortgage rates to consistently trend upwards (where else could they go?). Yet with moderate economic improvement over the last few months, and most recently, several tumultuous global events (Japan disasters, unrest in the Middle East and Africa), mortgage rates have found little upward momentum.
However, outside of current mortgage rates, the mortgage market is in the midst of a regulatory whirlwind that has the market in a “swirl.” HSH.com’s VP Keith Gumbinger shares nine issues “which all contribute to the uncertainty in the market and are a deterrent to improving lending conditions, reducing costs or to making the mortgage market a less-messy landscape.”
There’s little new or emerging news in the world of mortgage rates. As we examine the movement and behavior of the economic markets from the week prior (just as we do every Monday), we’re faced with the same old story: low mortgage rates and a weak recovery. Last week’s unemployment report only served to maintain the current environment of low rates and a tepid recovery.
“Prospects are not improving for a speedy return to quicker growth,” according to HSH.com’s latest Market Trends Newsletter, “but that is serving to keep mortgage rates at fantastic levels.” Read the rest of this entry »
On a bi-monthly basis, HSH.com releases their Two-Month Forecast for Mortgage Rates. In each forecast, we review our previous prediction — evaluating the circumstances that caused rates to do what they did — and we examine current factors and conditions in order to forecast mortgage rates over the next nine weeks or so.
Each two-month forecast is made up of four parts: the preface, a recap of our previous prediction, the forecast discussion and finally the forecast itself. We’ll do a short summary of each section here on the blog, but be sure to visit HSH.com to read our entire forecast.
Everybody knows interest rates are low and that there’s a lot of refi activity going on. So instead of focusing this week’s Market Trends recap on last week’s movement of mortgage rates, we decided to examine the question “if I’m an ARM borrower, should I refi?”
In today’s market at least, fixed-rate to fixed-rate refinancing is arguably the most common occurrence. However, given the fact that short-term interest rates are so low, especially the short-term rates which govern ARMs, we wondered how many ARM borrowers would be interested in switching products?
HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.
