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Rates of Mortgage Loans Nearing Record Low

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By : John Cutts    99 or more times read
Fluctuation in the stock market and the ongoing debt crisis in Europe have contributed to dragging the mortgage loans rates in the U.S. to an almost record low. For homeowners seeking refinancing, analysts are saying that now would be as good a time as any.

However, market analysts are predicting that this opportunity might disappear soon once investors regain their confidence and decide to move their money out of government bonds, a primary factor behind the movement of mortgage rates.

Real estate market observers have asserted that homeowners and borrowers should take advantage of the low rates of mortgages, with 30-year fixed rate loans declining to 4.78% during the last week of May. This makes it the lowest rate for the whole 2010. Fifteen-year mortgages are also at their lowest level in the past two decades.

According to the Mortgage Bankers Association, some homeowners did heed the encouragement of market analysts, with applications for refinancing rising in the last week of May to their highest number in the past seven months.

Market observers have stated that investors have become worried over the debt crisis in Europe, leading them to focus their attentions on Treasury bonds. This type of investment is being viewed right now as a safer option than other forms of investments. As a result, yields of Treasury declined, taking mortgage loans rates with them.

Despite the low rates of mortgages, loans for buying residential properties remain at their lowest in over 13 years. This trend has been explained by market observers as the result of the tax incentive which expired on April 2010. According to analysts, many homebuyers already closed purchase contracts before and right at the deadline date of the tax credit.

In addition, some homebuyers are finding it hard to secure financing since banks have made qualifying for a mortgage even more difficult than before. Homebuyers are required to have a good credit history and are being asked for down payments of at least 3.5%. Tighter lending rules, analysts have stated, are direct results of banks learning their lessons from the housing market bust that started a few years ago.

Housing market experts have warned homebuyers and homeowners seeking refinancing to take advantage of the low mortgage loans rates. According to them, if the country’s economy continues to recover, investors will likely move into stocks and drop out of bonds, which would make mortgage prices return to high levels.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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