Currently mortgage rates are at an all-time low. In the week of October 6, the rate for a thirty year fixed mortgage declined to a 3.94 percent. Rates for 15-year fixed mortgages also declined to 3.28 percent. During July of October 2011, rates dropped to the lowest levels in 38 years. Despite low interest rates, homeownership has decreased significantly in the States. Homeownership is currently at 65% in 2010 compared to 66% in 2000.
Let’s take a look at the reason why mortgage rates have declined so drastically. Treasury bonds and mortgage rates always go hand in hand. The European debt crisis has affected the yields of treasury bonds which in turn has affected mortgage rates.
American’s aren’t rushing out to buy a new house despite lower rates and the plethora of affordable homes tbat are available. Many Americans are still unable to find a job because of the poor job market. In addition, it is more difficult than ever to qualify for a home loan.
The criteria to buy a home is much stricter; lenders are requiring a larger down payment. An applicant’s monthly income also needs to be at least three times the monthly mortgage payment in order to qualify. Even qualified applicants are being denied loans because of restrictive credit requirements. Lenders are being more cautious than ever in order to protect themselves from high risk mortgages.
A score of at least 700 is needed in order to get a good rate. Around forty percent of American families do not have a score of over 700; the minimum required for a prime rate. Twenty five percent of all consumers have a subprime score of under 599. This number is substantially higher than it was a decade ago. Visit mortgage rates in order to get a home loan or to refinance.
The job market has not stabilized enough in order for a large number of home buyers; high unemployment is preventing many Americans from purchasing. People don’t feel comfortable purchasing without a solid job in place. Many individuals find it more cost effective and more manageable to rent. The unstable economy is another factor. Many families are unwilling to buy given the state of the economy and the fact that many current homeowners are in underwater mortgages. Visit mortgage loans for access to low mortgage rates.
Even though home lending has decreased significantly, there has been an increase in refinancing. However, refinance applications has gone up by around thirty percent. Refinance rates for jumbo loans, or those over $625,500 will be at least half a percentage higher than traditional loans.
Even though rates are at an all-time low and many low priced foreclosures are for sale it looks like most Americans are not willing to buy just yet. It will take time before many Americans will be able to take the leap to homeownership. Our lender at mortgage lenders offers great rates on home mortgages.