When will the mortgage and real estate industry recover? We’ve been in a slump for a few years now and it doesn’t seem like the market will recover any time soon. Our country’s credit rating has just been downgraded plus many Americans are unemployed. Other factors hindering recovery include the national debt and deficit. Plus on top of that, civil unrest in the Middle East is having Americans worrying about the high gas costs. Not to mention the fact that the value of many homes are continuing to decline drastically. As a result Americans aren’t exactly lining up to buy houses; more and more people are deciding to play it safe and rent instead.
It’s not just new mortgages that have been hit; the refinance market has been affected as well. The Refinance Index decreased 1.7 percent. The majority of all mortgage applications (over seventy percent) are for refinancing. The adjustable rate mortgage (ARM) share of activity jumped 6.2 percent from 5.8 percent of total applications the previous week.
Now let’s look at the figures for new mortgages. The Mortgage Bankers Association released figures which show the purchase index for new mortgages to be at its lowest point in 15 years as of the week ending August 19. The Market Composite Index, (this is how the government measures how many new applications there are), dropped 2.4 percent from the previous week taking account of seasonal adjustments. Not considering the seasonal adjustment, the index fell 2.9 percent.
Some experts predicted that fewer Americans would buy bonds but fact is that investors are still eagerly buying. This is rather surprising because U.S credit has just been downgraded. Experts actually predicted that interest rates would increase significantly.
Chances are that interest rates will probably go up and increase in the near future. Let’s look at the contract interest rate for a 30 year fixed rate mortgage ; it increased to 4.39 percent from 4.32 percent. Not a huge jump but still a jump when considering how interest rates were falling. The average interest rate for a 15 year fixed rate mortgage jumped to 3.56 percent from 3.47 percent.
Jumbo loan applications also decreased by more than fifteen percent. This is probably because the government changed the loan limits on jumbo loans. We also saw a significant drop in mortgage applications for housing programs sponsored by the government; these dropped to over 8 percent.
The MBA index covers more than half of all retail residential mortgage applications in the U.S. The index surveys mortgage bankers, commercial banks, and thrifts.
Another reason why rates are going up is because of how volatile the markets are. However, if you are interested in buying a home, now is still a good time since rates are low. Only time will tell how this will play out. It will take time in order to determine how the market will be affected by the downgrade in U.S credit. We’ve never been in this situation before so we’re all sailing unchartered waters.Written by Sasha Dior Midwest Management offers Apartments Minneapolis and Apartments for rent Golden Valley for seniors. Our apartments are affordable and gorgeous. Gmac offers refinancing loan and mortgage information. Visit our site to find out mortgage rates.
Written by Sasha Dior http://www.midwestmanagement.net/ http://www.midwestmanagement.net/j/i/38885/ArthurPlace.html http://www.gmacmortgage.com/