MortgageFit Blog

It has been noticed for quite some time that the mortgage rates have been incredibly low. It has tempted a number of people to refinance or buy their first home. But it’s really doubtful whether everyone would qualify for the lower rates or not. There are lots of factors which one has to consider in this regard. Some of these are mentioned below:

Can everyone get a mortgage with a low rate?
It is not necessary that everyone would get a lower rate like 4.78%. It should be kept in mind by the buyers that it is average rate. It should not be considered as the standard rate.

Another important thing which most of us don’t know is that a rate can change several times during a day. This is due to fluctuations in the market. Thus, you’ll note that mortgage rates are 5.5% in the morning but has increased to 5.75% in the evening.

Loan rates can also vary depending upon the loan type. Thus, a 15-year fixed-rate mortgage may have a lower rate than a 30-year fixed mortgage. Mortgage rates also vary due to the size of the loan. If you are planning to take a “jumbo loans”, be ready to pay higher interest rates.

Are there other factors which may not allow me to get lower rates?
Yes, there are other factors as well which may prevent you from getting a lower rate. Your credit score is one of them. If you have a credit score of around 800, lenders will be glad to offer you attractive rates. On the other hand, a borrower with a credit score of 650 will not get good rates from the lenders. Rates will also depend upon the amount of loan you want to take compared to the cost of the property. If you take a loan less than 80 percent of the home’s value, then, you can expect to get better rates.

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Last week, the fixed mortgage rates fell again as the Federal Reserve planned to buy the mortgage backed securities. It was noted that rates for 30-year fixed home loan had declined to 4.80 %. On the other hand, the 15-year fixed rate was unchanged at 4.48%.

In an announcement on March 18th, the Federal Reserve said that it would purchase as much as $750 billion of additional mortgage-backed securities from Fannie Mae and Freddie Mac. This declaration resulted in record low rates for fixed mortgages. As the mortgage interest rates are falling to a record low, it will stimulate the buying of homes.

In the last week, due to lower rates, the number of mortgage applications in the U.S. rose. Moreover, refinancing applications also increased due to the falling of the mortgage rates. Thus, the lowering of mortgage rates is giving a positive boost to the real estate market helping it to come out of the present crisis.

With the Federal Reserve planning to buy $600 billion of debt owned by Freddie Mac and Fannie Mae, mortgage rates have plunged to the lowest in the past 7 years. Average rates on 30 year fixed mortgages with no fees and closing costs have gone down to around 5.25%.

Earlier when rates have been going high, home resales have hung up. However, the Fed’s move to purchase Freddie Mac and Fannie Mae loans is expected to bring some positive changes in the housing market.

The Fed also intends to set up a $200 billion program in order to provide financial support to consumer and small business loans. However, it is expected that strict lending rules and growing job losses in a weakening economy will make it tough for markets to come across a revival, even though rates may go down further.

It’s not a matter of what rates one can afford. Instead, it’s an issue about the supply of homes which is quite high. Until and unless the supply and demand get normal, the market won’t see stability and revival.

Let’s just hope that the Fed will be able to deal with the market crisis by clearing the market of subprime mortgage securities, the primary reason behind the mortgage mess.