Foreclosures Expected To Drop as Mortgage Rates Decrease
Repossessed Houses numbers are expected to drop as mortgage rates decreased from last week’s 5.97% to 5.53% as announced by Freddie Mac. It seems borrowers are at last getting some time to breathe. This is the sharpest drop since last January and a record weekly drop since the last 27 years. Borrowers understanding it are hurrying to negotiate for refinancing from their previous higher rated loans.
Beth Brandt of First Mackinac Savings Bank said, “Lots of people who are refinancing now have adjustable-rate-mortgages or they want to take cash out. It’s nice to give back to some people who are current on their mortgages.”However many others continue to wait because they are surmising that loan rates will further tumble. This idea gained ground because of a Treasury Department report released last week that there are moves for a plan to finance new mortgage loans with 4.5%.
Rates have been falling since the last two weeks when the feds announced a move to start purchasing mortgage debts worth $500 million. This triggered off a buying frenzy among private investors commented Casey Casperson of National City Mortgage.
There was a rush for refinancing during the week celebrating Thanksgiving. The number of applications increased three fold according to Mortgage Bankers Association.
Not all the applicants will qualify to get the new low rate loans. In South Florida especially some of the houses are worth less than the loan amount. This is because of the steep fall in property prices following the foreclosure crisis. For many potential buyers the low rates are good, provided they manage to get a loan. Lenders have introduced strict lending standards by asking for heavy down payments and high credit ratings. This will put low rate loans beyond the reach of many ordinary buyers. For those who are qualified the question that arises is should they snap up the offer or wait for rates to further tumble?
Casperson opines that for those people who are sitting undecided on the fence this is the best time to make a move. Nobody can say anything for sure about tomorrow. The decision about refinancing depends upon how long the borrower plans to stay in the house and how much can be saved. Brandt says that it is sensible to make a move when the current rate is 1% higher (minimum) than the new announced rate.
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