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Drop in Mortgage Interest Rates: An Opportunity for Homeowners Facing Foreclosure

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By : Leticia Carvalho    99 or more times read
The weekly survey conducted by U.S. Federal Home Loan Mortgage Corp. or Freddie Mac showed that interest rates for a 30-year fixed-rate mortgage declined below 6 percent on average for the week ended November 26, 2008.

This decline in interest rates provided opportunities to homeowners who are facing the threat of foreclosure to apply for refinancing. The interest rate for the fixed-rate mortgage averaged at least 5.97 percent, down from the 6.04 percent average of the previous week. The 30-year fixed-rate mortgage averaged an interest rate of 6.10 percent for the same period in 2007.

The 5-year Treasury-indexed ARM averaged 5.86 percent, a decline from 5.87 percent average of the previous week. For the same period last year, the 5-year ARM also registered a 5.86 percent average.

On the other hand, the one-year ARM averaged 5.18 percent, a drop from the 5.29 percent average of the previous week. A year ago ARM average was 5.43 percent.

Meanwhile, the 5.74 percent average interest for the 15-year fixed-rate mortgage was an increase from the 5.73 percent average the previous week. For the same period last year, the 15-year mortgage averaged 5.73 percent. chief economist Cameron Findlay points out that continuous drop in mortgage interest rates is good for consumers, especially for homeowners who are facing the threat of foreclosure.

HSH Associates Vice President Keith T. Gumbinger notes that the decline in mortgage interest rates is the first initiative aimed at stabilizing the housing market affected by foreclosures and helping homeowners avoid foreclosure.

Frank Nothaft, chief economist at Freddie Mac, points out that lower mortgage rates and declining house market prices are contributing to the increase of housing affordability for the month of September which may lead to alleviating the foreclosure crisis.

However, homeowners on the brink of foreclosure who are interested in refinancing may be facing difficulty in qualifying for a new mortgage as property prices drop and underwriting rules remain strict.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.

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