The past year saw erratic mortgage rates, reflecting the country’s national housing crisis and foreclosure problem.
Usually, mortgage rates are fairly stable and predictable. The steadiest time would be in winter, increasing toward the end of the year. By late February, going into March, rates would decrease and become steady until late fall.
Sharon Heitman who owns the mortgage consulting firm, Heitman Group says that the 1980s refinancing boom was already wild time for mortgage rates.
However, 2008’s home loan rates were even more volatile as more homes went into foreclosure. At the start of 2008, a few long-term mortgages hovered in the 6 percent area, with the average rate nearing 7 percent by July. In October, rates had risen by half a percentage point in only a seven-day period. This dropped by the same rate the following week, then surged again the week after.
Thirty-year fixed-rate ,mortgages which are the most common started at around 6.14 percent in the northeast parts and 6.07 or lower. Interest rates dropped to a national average of 5.1 percent or lower.
Heitman says that mortgage rate highs and lows are usually separated by only around a tenth of a percentage point. In the past, sudden swings such as those experienced in 2008 would reflect an error.
There were also a marked interest rate swings when the government-seized Fannie Mae and Freddie Mac increased mortgage fees to buy their own weakening finances, to the detriment of those with foreclosure problems.
The home loan swings were a reflection of the national economic problem. Despite government programs to address foreclosure issues, lenders worried that borrowers would not be able to pay their loans, causing interest rates to soar. Rates also depended on the immediate possibility of banks reselling the loans to investors.
2008 was a year beset with foreclosure problems and a souring economy. Home buyers are encouraged to continue shopping around for the best loan options. Hopefully, 2009 housing prospects will be better.
Author Resource:-
Leticia Carvalho has been educated in the finer points of the foreclosures market over 5 years. Read about the following article A Year for Foreclosures: The 2008 Mortgage Rates Review by Leticia Carvalho.
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