The lowered mortgage rate attracts millions of homebuyers
The real estate market is inviting more and more homeowners, both prospective and current, who are making a beeline for mortgages following the slid in the rate of 30-year fixed-rate mortgage. The rates went southwards from 4.09 to 4.05% during the past 1 week. Even the 15-year fixed-rate mortgage has suffered a blow which now stands at 3.25%, down from 3.28%. In addition to that, rates of adjustable rate mortgage (ARM) have been slashed to 3.02% from 3.03%.
Financial analysts, however, don’t agree with this sudden upsurge in demand and are expecting some more initiatives from the Fed and the government that will help to stabilize the housing market and regain its lost sheen. A weekly survey of the mortgage industry by a prominent financial website revealed that the mortgages approved during the previous week had a discount of about 0.45% on its rates and origination costs.
Who will be the most benefited one?
Young population having clean credit report stands to make the most out of this market trend. According to the experts, disciplined borrowers are categorized as the strong-quality mortgage applicants who are capable of paying as much as 20% in terms of down payments. These people have managed their money with great efficiency, have few credit accounts backed by a decent monthly income.
The market figures show the highest first-quarter mortgage sales that broke all the records of the last 5 years. Moreover, this trend of mortgage lending is expected to perform well even during the coming months.
The data released by the National Association of Realtors, says that clearance of all the agreements made to purchase homes has increased more than a year ago. The home sales index for agreements closed during the recent pasts has been on the rise, which is 12.8% higher than last financial year. This year contract clearance rose by 4.1% surpassing the previous records.
Analysts predict a stabilized real estate market if such a trend continues for a few more consecutive months.
How will mortgage rates react during the coming months?
The stability of mortgage rates will depend on the policy drafted by the Fed. The compromising fiscal policies by the Fed will help to keep the mortgage rates low, as said by Paul Edelstein, financial economics director at IHS Global Insight. He further adds that this change in pro-consumer policies will not happen before 2014.
However, experts advice caution to the general consumers because the rates might increase before the said term. This is due to fact that rate is directly proportional to the developments in the U.S financial markets and elsewhere, like the European credit industry.
What is the most suitable time to buy a home and under what agreement?
In most parts of the nation, the rates are going steady which makes it the most suitable time to buy a home with a lower monthly payment. In the words of Michael Becker, a mortgage expert attached to WCS Funding based out of Baltimore, mortgage rates and home prices never increase when there is a rise in the rents. So he suggests that this is the favorable time to apply for a mortgage and purchase a new home.
Now, prospective homebuyers and refinancers, have to follow the stringent rules to be eligible for a mortgage loan approval. The average FICO score of eligible applicants were 749 during the past months. Borrowers whose applications were rejected had an average score of 699.
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