Mortgage Rates Continue To Drop But Demand Still Low

Mortgage Rates Continue to​ Drop,​ but Demand Still Low
For the​ fourth week consecutively,​ the​ mortgages rates eased a​ little more .​
According to​ the​ recent Primary Mortgage Market Survey by Freddie Mac,​ the​ rates for both short-term loans and long term loans have fallen by a​ small margin in​ the​ last week.
The average of​ 30 year fixed rate mortgage settled at​ 6.24 percent with 0.4 point last week as​ compared to​ 6.26 percent and 0.4 point,​ the​ week before .​
This is​ the​ lowest after the​ week ended 17th May 2018,​ when the​ 30-year FRM was 6.21 percent .​
According to​ last year's data the​ interest rate averaged at​ 6.33 percent,​ same time last year.
Though the​ fees and points for the​ 15-year fixed rate rose from 0.4 point to​ 0.5 point,​ mortgage averaged at​ 5.90 %,​ just 0.01 % lower as​ compared to​ the​ week before .​
Last year too it​ averaged at​ 5.91 % .​
This is​ the​ second lowest as​ in​ week ended 10th May the​ average rate was 5.87 %.
While the​ 1 year adjustable rate mortgage remained unchanged,​ 5/1 ARM 0.07 % higher than the​ previous week and averaged 5.96 % .​
The Fed prime rate too remained unchanged but the​ 30 year treasury rate averaged 4.53 % which was 0.07 % lower as​ compared to​ the​ week before .​
The 1 year treasury index ARM averaged 5.50 % down from 5.57 % last week.
But in​ spite of​ falling mortgage interest rates,​ the​ demand for mortgage loans still seem to​ be lower .​
The refinance loan applications in​ the​ third quarter dropped to​ 38 % from 42 % in​ the​ second quarter .​
The most obvious reason is​ the​ tightening of​ lending standards by the​ lending firms post mortgage crisis situation that has led many banks and other financial institutions to​ write off huge amount of​ mortgage backed securities and other debts.
This is​ evident from the​ survey report released by Federal Reserve .​
Senior Loan Officer Opinion Survey on​ Bank Lending Practices pertains to​ the​ third quarter of​ 2018 .​
The report revealed that over last few months lending standards for commercial and industrial loans had been revised and made more stringent by domestic as​ well as​ foreign lending institutions .​
The same applied for commercial loans pertaining to​ real estate.
Though it​ was subprime mortgage loans that triggered the​ mortgage crisis,​ financial institutions are now playing safe by introducing stricter norms for most borrowers having anything les than excellent credit ratings .​
The situation is​ unlikely to​ undergo any change with the​ reports of​ foreclosure rates rising and speculations that the​ banks may write off even higher amount in​ the​ fourth quarter,​ substantiates the​ fears more.
the​ foreclosure rate in​ the​ third quarter rose by almost 30 % as​ compared to​ that in​ the​ second quarter .​
Even though the​ government is​ trying to​ come up with feasible solution to​ the​ problems of​ distressed homeowners,​ with a​ good number of​ loans due to​ resent by mid of​ year 2008,​ the​ foreclosure rates are expected to​ remain high .​
Thus housing market is​ expected to​ remain slump throughout next year and even in​ early 2009.
Mortgage Rates Continue To Drop But Demand Still Low Mortgage Rates Continue To Drop But Demand Still Low Reviewed by Henda Yesti on July 03, 2018 Rating: 5

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