Consumers Apply for Fewer Mortgages
March 8, 2010 · Print This Article
During the first week of February the number of mortgage applications dropped. This was not particularly good news for the economy because it means that the demand for new homes is falling even as the recovery tries to find stronger footing. The falling demand for mortgages occurred despite the availability of some of the lowest rates seen on 3-year mortgages since December. Mortgage application figures include new mortgages and refinancing requests.
The 30-year fixed rate mortgages are currently being financed at 4.94 percent. This is the lowest rate seen since 18-December-2009. The numbers were released by the Mortgage Bankers Association and are cause for concern. They clearly show consumers are still struggling or unwilling to spend money which is not surprising since the unemployment rate remains at 10 percent nationwide.
The number of applications for new home mortgages and refinanced mortgages declined by 1.2 percent for the week ending 5-February-2010. The interest rates on 30-year fixed mortgages have not fallen below 5 percent since December, and it had been hoped the low interest rates would spur the housing market.
The one glimmer of hope is that this may be a temporary decline and the number of applications will begin to trend upward again. The lowest that mortgage rates have fallen over the last twelve months is to 4.61 percent in March 2009. The prediction is that mortgage rates will increase on 30-year fixed mortgages to 5.5 percent by the middle of this year.
To stimulate the economy, the Federal Reserve has been buying mortgage-backed securities and that program is ending in March. Ending the program probably means that interest rates will begin to rise because the securities purchases worked to lower borrowing costs. The mortgage industry has been in a 3-year slump as housing prices continue to fall.
Despite signs of a recovery, it is clear that the U.S. economy has a long way to go before it will be on even ground again. In the fourth quarter of 2009, one out of every five U.S. homes was underwater. This means the mortgage is more than the market value of the house. There is still ongoing debate between the banks and the government policymakers as to how the banks should remove the inflated assets from the balance sheets.
The number of foreclosures continues to rise too. Consumers are cautioned to be alert to possible scams. There is a dearth of mortgage relief companies offering consumers assistance with getting their mortgages modified. The companies require a fee up front for their services and then fail to deliver help.
The Federal Trade Commission has proposed new rules that would ban these mortgage relief companies from charging up-front fees. They would not be allowed to charge a fee until services were provided as promised.
The total number of mortgage applications for the first week of February was made up of 69.7 percent refinancings with the balance being new mortgage applications. The 15-year mortgage rates are low also at 4.33 percent.
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all paperwork ready, banks statements, pay slips bills, etc
Hello, what happens if an identical house is sold for 500k. Could the bank ask for money back (75% of 500k) immediately?
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NEW YORK (Reuters) – The demand for mortgage applications to purchase homes rose last week for a third straight week as interest rates tumbled, the Mortgage Bankers Association said on Wednesday.
continued.. who made the extra layer and stimulated the purchases, are the ones who should be bailed out. Hmm.. do you have lessons on the bail out plans and the medical overhaul?
At a meeting of the Federal Reserve’s top policymakers, the Fed made it clear that it is concerned with the slowing economic recovery amid continuing unemployment and sluggish hiring. The Fed vowed to buy government debt by using money from mortgage backed securities and will keep its interest rate at historic low.
Federal Reserve System – Government debt – Interest rate – Economy – Mortgage-backed security
Philadelphia Home Loans: You Can Get A Better Mortgage At A Credit Union
this guy is a dunce. He is making this more complicated then it needs to be.
Daily Financials Forecast: The Mortgage Bankers Association reported mortgage… #MKT #Forex #traders
The Mortgage Bankers Association said on Wednesday U.S. mortgage applications leaped last week as rock-bottom interest rates
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depends on your interest rate
lets say you did a 30 year 5% fixed
1825.19 would be your monthly
here's a calculator.. toss around your own numbers.
I am thinking about Mortgage-backed security #MortgagebackedSecurity
Mortgage Backed Securities (MBS) supply investors (such as a pension funds) with a flow of capital from home owners, through the banks.
Banks are just one of several middle men.
Lets follow the flow of money:
1. Bank gives $200,000 to John
The banks know that John will end up paying about $175,000 in interest on top of the $200,000 in a steady stream of payments (about $1250 per month)
2. The Bank sells this stream of income to Company Z for $250,000
4. Company Z sells chunks of this investment to a Pension Fund
5. John pays $1250 next month to The Bank
6. The Bank gives this money to Company Z
7. Company Z gives a share of the profits to the Pension Fund
Meanwhile The Bank has written another loan for $200,000 to Mike with the money it received from Company A and the process continues.
This was a simplified version, normally there are several hundred home loans and several middle men all taking their share. By pooling all of these home loans together the MBS's risk is lowered.
Hope this helped
oh noez! homestealerz!
thanks mr refiadvisor
Pending home sales show surprising bounce: A recent report from the Mortgage Bankers Association noted that averag…
I sure hope not, but this will be long talked about, especially with it undermining the banks to the point of failures and collapse. I am sure many books and economic proposals will be written about it, and I am sure that more regulations will come into play because of this. I know we need more oversight but it will be a delicate balance between too much government involved with capitalism.
I can’t believe how smart this guy is
Amazing!!
best video i have seen about mbs thanks!
I think it's nice that my mortgage company is using fancier paper now.