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Created on Thursday, 09 February 2012 09:15

2012 May Not Present Any Significant Improvement in the Housing Sector

It has been years since disaster struck both the housing and mortgage market causing both markets to fall flat on their bellies. The downfall of the housing and mortgage markets has had consequences on both homeowners and those seeking to acquire homes.

Even mortgage lenders and investors, who, one would have thought would be better equipped to deal with cases like this have had a lot of financial problems.

Some of these companies have been able to deal satisfactorily with the situation. Most of these mortgage companies that claim to have handled the mortgage downfall have done so at the expense of the homeowner and the general financial conditions of the country. Others have had no other choice than to close down their businesses.

The nation’s mortgage woes call for a drastic measure that will effectively combat the mortgage problems and restore the housing market back to its glorious days. The nation needs to find a way of clearing the huge backlog of homes that have been foreclosed and as such are lying abandoned in almost every neighborhood in the US today.

But so far, measures to help distress homeowners stay in their homes and continue to make monthly contributions towards settling their home loan has faced a lot of challenges. Maybe, we failed to foresee the challenges that will spring up because these measures were hastily put in place in a bid to ensure that the nation’s economy was saved from disaster.

As things stand now, there are more homeowners who are constantly on the move in search of mortgage assistance to prevent foreclosure than there are new buyers who are looking to acquire mortgage loans.

The mortgage market is failing to attract potential clients, even though current mortgage rate on a 30 year fixed loan for a borrower in good financial standing is below the 4% mark. Before the mortgage crisis, a 4% mortgage rate was unheard off and hard to obtain no matter how high the borrower’s credit score was.

But today, we see most mortgage companies advertising this rate, yet very few people are walking into their offices for the purposes of initiating a home loan. However, the reduced mortgage rate has rather brought out the need for homeowners to seek to refinance their home loans to more affordable rates.

It is not just the mortgage sector that has failed to win the interest of potential customers with reduced mortgage rates. The housing sector currently boasts of very low home prices due to the vast majority of distress homes on the market.

Nevertheless, experts have come to realize that low interest rates and low prices are not enough to renew the lost confidence in the housing sector.

Vice President of Fannie Mae, Doug Duncan, believes that contrary to popular assertions that the mortgage and housing markets will see great improvement soon, it is certainly not going to be this year. According to him, increase in purchase will be very pivotal if the housing market is to see any meaningful development.

Unfortunately, many people are more concerned with securing their jobs and so, cannot take the risk of seeking to acquire home loans.

The job market has been very unpredictable with most people waking up in the morning to find out that they have lost their jobs due to deteriorating economic conditions. Stability in the job market is necessary to promote growth in the housing and mortgage sectors.

The Chief Economist with Fannie Mae also believes that up until the end of 2015, the US housing market will still remain in a fumbling posture. He emphasizes the need for government to double up on job creation since that is the only way to help the housing market.