Quite ironically, as desperate homeowners seek considerable amounts of assistance in order to prevent foreclosure and remain in their homes, interest rates on mortgaged homes have shot up.
Reports received from officials of Freddie Mac show that just about a week ago interest rate on a 30 year fixed mortgage stood at an average percentage of 4.51%. Today, it stands at a rate of 4.60%. Accordingly, the rates on other forms of home loans have also seen an increase.
Homeowners looking at the possibility of obtaining a 15 year fixed mortgage would find that the 3.69% figure they were looking at last week has increased. The new figure stands at 3.75%. Whiles the adjustable hybrid 5 year mortgage also increased from 3.22% to 3.30%.
In spite of these increases in mortgage rates within a week, the new figures except for the 30 year fixed mortgage are comparatively lower than values of the same period last year when the federal government was handing out incentives to stop the decline of the housing market.
The demise of the housing market during the global financial downfall still has most customers and lenders skeptical about recovery efforts, this coupled with continuous increase in unemployment figures has caused a general decline in home sales across the entire nation. This is so even though mortgage rates are very low.
Frank Nothaft, Chief Economist with Freddie Mac is confident the housing market would soon see a boost in sales. According to Nothaft, the market is in a transition state and would very soon move into summer; the season that is mostly associated with increase in home sales.
The Freddie Mac chief economist believes that interest rates on home loans were affected by the increase in Treasury bonds which saw a 3% rise over the past week. He maintains that the current interest rates from hindsight are ‘quite affordable’.
An association of mortgage bankers on a weekly basis carries out survey on companies that provide loan services to homeowners. For three continuous weeks now, figures obtained by the association show that efforts aimed at helping homeowners to refinance their mortgages is constantly declining.
The lenders’ index according to the Association of Mortgage Bankers fell by 9.2%. The somewhat positive thing here is that, mortgage rates are lower. This is an advantage to homeowners who can afford to repay their home loans.
Further clarifying the situation, Nothaft of Freedie Mac said that the average percentage of all mortgages that remain outstanding during the first quarter of the year totaled fewer than 6%. As an example of the benefits of the current mortgage rates, Nothaft used a 30 year fixed mortgage on a $200,000 home to illustrate. He said by refinancing such a mortgage, the homeowner could save up to $169 per month on interest payments.