| Community Members Opinion |
jenkin7
Joined: 04 Jun 2007
Posts: 3430
Location: Hawaii
514.35 Dollars($)
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 Posted: Sat Aug 15, 2009 1:04 am Post subject: |
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Hi Adonis,
Thanks for sharing this update. 
The increase in the interest rates for 30 year mortgages has lowered the demand for new loans by a small margin. As per the Mortgage Bankers Association's index loan applications dropped by as much as 3.5% for the week ended on August, 7. The demand for refinance also came down by 7.2%. Nevertheless, the first time buyer's tax credit, declining real estate prices and Federal Reserve initiatives to keep the rates as low as possible, have been able to draw quite a number of people to the housing market in recent time. |
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litisham
Joined: 23 Jun 2009
Posts: 116
0.02 Dollars($)
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| Posted: Sat Aug 15, 2009 5:24 am Post subject: |
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| Is this impact of recesssion?(reduction of interest rates) |
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Niicss
Joined: 03 Oct 2005
Posts: 2620
Location: New Jersey
409.63 Dollars($)
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| Posted: Mon Aug 17, 2009 3:34 am Post subject: |
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Earlier this year, the mortgage rates reduced heavily due to the crisis in the real estate market. Fed purchased mortgage-backed bonds which were issued by Fannie Mae, Freddie Mac and Ginnie Mae and allowed lenders to reduce rates on new loans. This helped to lower the mortgage rates to a record low of 4.78% in April. Thus, the falling rates helped boost refinancing and mortgage applications.
However, now the interest rates have started to rise. As stated in the news by Adonis, the 30 year mortgages are available at a rate of 5.29% whereas the 15 year mortgage are available at 4.68%. |
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savior70
Joined: 25 Mar 2009
Posts: 1422
Location: Florida
168.75 Dollars($)
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| Posted: Mon Aug 17, 2009 3:45 am Post subject: |
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Hi,
The mortgage interest rates depend on several factors. The supply and demand in the real estate market often determine the market rates on home loans and other secured and unsecured loans. The recession in the economy has affected the purchasing power of people. With thousands of job-cuts, people do not have enough money to purchase a new home. This has dropped the demand for credit. In this situation, when demand is less than supply, the interest rates have jumped down to a record low.
The Federal Reserve also controls the mortgage interest rates in certain ways. They have also taken some measures to keep the rates low in an effort to boost the demand for credit in the market. The rates also depend on the 10-year treasury yield index, which in turn depends on the performance of the economy. Due to the depression in the economy, this index has been on the lower side, causing the interest rates on mortgages to go down. Thus, it could well be concluded that the recent drop in the interest rates is due to the recession and an ailing economy. |
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