Low mortgage rates have been one area consumers have benefited from over the last 3 years, and the good news is the summer of 2014, rates continue to hover near record lows, helping offset high gas costs and reduce the frequency for needing a cash advance or payday loan.
The month of May 2014 is witnessing mortgage rates dropping, while not quite to the level of the historically low rates of two years ago, still quite attractive. Without doubts, the low mortgage rates are proving to be an incentive to buyers to take advantage of falling home prices as well as giving more scope for refinancing.
What do market analysts perceive of the situation? Well, they think that the dip in mortgage rates is not exactly going to lift the housing industry or do a lot to the state of the overall economy. A senior analyst says that the general mood of people is low, they are not really confident about the fluctuating economy with job loss, fluctuating home prices and other pit-falls of the economy. The real estate in many metro areas of the state is being crushed with tighter credit requirements, high unemployment, higher down payment requirements, foreclosures and buyers’ expectation of prices being even lower in the future.
One thing is clear though, the mortgage rates this season, is quite on the welcoming side. A buyer who is qualified can expect to finance a home for over 30 years at a fixed rate of 4.63 percent; the lowest average rate in the past five months, according to the information given by Freddie Mac. We had seen an interest rate of 4.17 percent last November, which was at an astonishing 4 decade low. Also, the 15 year fixed mortgage that is a favorite with refinances has been reduced to 3.82 percent.
There is a belief among buyers that the prices are yet to hit bottom. So the general mood for building a home is still down, there are very few first-time buyers entering the market. There is another wave of foreclosures that is a bigger threat, it is forcing down prices to go down further in most cities in the US. 3.7 million homeowners are at huge risk of losing their homes according to the information given by Mortgage Bankers Associations.
25 percent of homeowners are not able to sell off their homes because they owe more on their mortgage compared to the value of their house. Melissa Peters, a 36 year old home-maker says, “There is nothing good about a low rate if one is topsy-turvy on the mortgage. “
People who are ready to buy a home are finding themselves in a problematic situation because they are not able to qualify for the mortgage. The average credit score for a loan that is backed by Freddie Mac and Fannie Mae has move up to 760 compared to 720 which was a good four years ago In any cases, these government run organizations back 90 percent of new loans. Less than 50 percent of American adults actually manage to get a credit score of 760.