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From Mentor's Desk- Mortgage Rates 'Sky is the limit'

Posted on: 01st Nov, 2005 08:53 pm
Mortgage rates go high for seven weeks in a row

The US economy seems to be making progress and experts believe that this might be the reason of the interest rates being the highest for the past 2 months. The economy registered an annual growth rate of 3.3% in the second quarter of this year. Investors and economists roughly evaluate the third quarter growth to be around 3.6%. Unless there is sufficient productivity, such faster growth may lead to inflation and the probability of higher inflation may cause interest rates to rise.

This year itself the rates for 30 year fixed rate mortgage rose 7 basis points to 6.24% as projected through a national survey. The discount and origination points for all mortgages had an average of 0.29% this week. On the other hand, the 15 year mortgages rose 7 basis points to 5.79%. But the rates of adjustable rate mortgages could register a rise of 5 basis points to 5.82%. Financial experts consider the rates on fixed rate mortgages to be quite attractive this year because these have been below 7% since April 2002.

But mortgage rates are expected to reach 6.8% by the end of 2007. However, economists consider this growth to be moderately low as per historical standards. As of now, the rates are expected to rise by 1/4th of a percentage point for the remaining part of this year. Investors also anticipate that Federal Reserve may increase the rates of short term loans to any unexpected value. As far as the long term loans are concerned, the rates may rise another 40 to 50 basis points by next year.

Jessica Bennet
Mortgage Mentor
Hi Rhodes,

I know what you are going through right now. But don't lose hope. Regrading the payment of your debts, I can suggest that you first pay off debts having more or less similar amounts. This is often done by consumers who have a number of accounts. This option at least gives you the satisfaction that you have cleared some of your debts and this will help improve your credit profile.

Posted on: 07th Nov, 2005 12:21 am
Hi Rhodes,

What Ronald says is absolutely correct. Paying off debts is turning out to be a major problem for many people right at the moment. This is more so because the interest rates have been hiked to a record level. Yes, I know that you are out of job currently, but lets hope that you get another job very soon.

As far as repayment of your debts is concerned, I shall suggest 2 more approaches other than what Ronald has put forward.

What you can do is pay off high interest debts first and then repay the others. This will help you to save more for future purposes. Instead of splitting up your payment over multiple credit cards (if you have more than 1 card), you can utilize your money towards the payment of a single high interest card. This will help to lower your principal amount and save more than the previous case.You can then apply these savings to the next high interest card.

Another approach requires you to pay down more than 50% of all your debts, for example credit card debts. This will help you to build up a good credit profile and improve your credit score.

It is up to you to select the right approach, but I would suggest that you go for the second way as with a better score you can apply for loans at reasonable rates in future.

Hope this will help you.

God Bless You

Posted on: 07th Nov, 2005 01:07 am
Hi guys

My knowledge says it will go up and this upward movement can be seen throughout this month.

The interest rates for the short term is going high and the investors believe that long term rates will also follow the same path.


Posted on: 07th Nov, 2005 05:10 am
Yeah, Niicss

I am a preety confused to know about the trend which the rate will going to follow.

All I can see that common people are suffering from this high trend. I want to suggest one thing to my fellow friends who want to go for mortgage, see this is not the time to lock your rate wait for some time.

May be christmas will bring cheers to us with interest rate going down

Posted on: 07th Nov, 2005 05:18 am
Hi all,

This trend of hike in rates is beyond our control, although it is making things tougher for us. Now, loan is also required at times and you can not avoid it to fulfill your urgent requirements.

I think a little budgeting and doing proper planning to control your expenses can help in this situation. The little amount you save from that budgeting can enable to repay some extra.

Hope my view works on me and all.

Posted on: 08th Nov, 2005 11:20 am

As Niicss and Bill, I also think that the rates will be on a upward trend for the rest of the month.

And if we are able to control our exoenses and save a little more this can help us a graet deal.

Posted on: 09th Nov, 2005 03:36 am
Hi friends,

The rates have gone up no doubt, but it is surprising to note that the number of refinance loans have increased as a whole. As a recent Freddie Mac survey suggests, during the third quarter of this year, 72% of Freddie Mac loans have been take in the form of cash-out refinancing. The organization has also given the forecast that by the year's end, homeowners will be able to convert $204 billion of equity into cash which is much higher than $142 billion recorded in 2004.

Posted on: 10th Nov, 2005 03:30 am
It is indeed surprising that in spite of high rates, homeowners are still refinancing. I have also heard that the rates prevailing now are the highest since the past 2 years. Wonder what common people like us are going to do, as it is i have spend a lot this month and i really need to save a lump sum for my debt payments.
Posted on: 11th Nov, 2005 03:29 am
Hi Ronda,

It seems that you are in trouble but don't worry. Just sit down and think over how you are carrying out your expenses. Are you spending more on unnecessary items? Then just stop doing it. Keep your cool and again sit down to plan a budget. Don't worry about your credit - if you can follow the budget, then it will be easier to pay off the credit.

A lot of people try looking for debt management service, but I will not recommend it. Rather, I would say that you first try it for yourself. A debt management service cannot lower the rates after all, the rates may go up again. So the best thing is to move on according to your planned budget so that while repaying debts you also get to save a certain amount from your income.

Hope you will benefit from this information.

God Bless You

Posted on: 12th Nov, 2005 08:02 pm
Hi Samantha,

Thanks for the suggestions. They gave me some comfort. I agree with you fully that we can try at least to control which is in our hand and hope for the better.

Posted on: 14th Nov, 2005 03:33 pm
Hi Bill,

You are right, at least we should try and control those things which are within our reach. I think for those in debts and facing problems, the Snowball method can be helpful.


Posted on: 14th Nov, 2005 07:53 pm
Hi bill,

Jerry's correct. The Snowball method is something which can really help those in debts. Even some of my relatives have benefited from it. Let me give you some details of the Snowball method.

The Snowball method of debt repayment requires you to follow some simple steps.

  • Make a list of all the debts in ascending order from the smallest loan balance to the largest.
  • Pay the minimum for each debt repayment.
  • Calculate what extra sum you can pay towards the payment of the smallest debt.
  • Make the minimum payment along with the extra amount towards the least amount of debt until and unless it is paid off.
  • The old minimum payment from the first debt is added to the extra sum of money and the new amount is applied towards the payment of the next smallest debt.
  • Practice this payment procedure with each and every debt and then you will find yourself debt free within a short time.
The Debt-Snowball method is the best way to repay debts related to revolving accounts such as credit cards.

Hope this will benefit you.

God bless you.

Posted on: 14th Nov, 2005 11:13 pm
Hi Samantha,

I am also thinking as to how i should pay off my mortgage and credit card debt. I got to know the details on Snowball method. I think it is going to help me. I feel relaxed that at least I can try out some way to repay the loans.

Posted on: 17th Nov, 2005 12:31 am

thats a cool advice samantha. i am in debts and want to get out of it. and i think snowball method is the method which will help me.

Posted on: 20th Nov, 2005 07:47 pm
Hi friends,

Finally, there is some sort of relief for homeowners as the mortgage rates did not go as high as the previous weeks. The rates of 30 year fixed rate mortgages rose to 6.37% from 6.36% as experienced last week. The 15 year fixed rate mortgages recorded a growth rate of 0.11%, that is it rose to 5.90% from last week's rate of 5.89%. The average jumbo 30 year fixed rate mortgages has gone higher from 6.6% to 6.61%.

The adjustable rate mortgages like 5/1 ARM reduced from 5.94% to 5.93% while the 1 year ARM registered a very slow growth of 0.06%.

Although rates have increased to a greater limit in the past few weeks, yet the average rates on fixed rate mortgages are still well below the average value of 8% that was recorded in 1990 and that of 1 year ARM which is well below 6% interest rate.

Hope that now mortgage seekers will be relieved to some extent.

Posted on: 21st Nov, 2005 06:54 pm
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