Welcome to Mortgage Guide
Home Mortgage Refinancing Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Why Can Mortgage Rates Rise in a Down Market?
from:With all the hoopla about the overload of inventory in most states (due to foreclosures), and the dropping of interest rates by the Federal Reserve, you may be wondering why mortgage rates haven risen in the past year over all. The mortgage industry is not the same as the banking and the housing industry. They are connected to these two sectors of the market, but lending products are usually priced on their own merits and not just those of the economy.
The Lender’s Point of View
So, while the amount of inventory can affect home prices and spur competition amongst lenders, it can lower the rates if one lender is trying to grab a bit more business. On the other hand, the mortgage crisis has been so severe in some states that many lenders are wary of lending to unreliable borrowers. They have tightened their credit requirements and when you don’t meet those newer requirements, they may raise the rate to hedge their risk. So, even with a market rate of 6.00% on a 30-year fixed rate mortgage, you could still end up paying more if you don’t meet the new credit requirements of a FICO score of 720 or more, solid employment, and a sizable down payment.
The Market’s Point of View
Mortgage rates can also increase, even if the Federal Reserve decides to lower interest rates. This may spur banks to lend out more money and attract more customers. As the new customers start to flood the market, the demand increases. When the demand of any product goes up, so does the price. That’s why the mortgage rates can even increase when the Federal Reserve cuts rates.
Your Point of View
It is very difficult to time to buy a house at the bottom of mortgage rate drop cycles. Typically, you can do this better if you are refinancing than if you are buying because you are then comparing your new loan to whatever you had before. If it saves you money or drops by at least 1 to 2 points of your mortgage interest, then you are pretty confident that buying at that time is a good move. Otherwise, if you are new buyer and have nothing to compare it to, you still can be relatively comforted by the fact that despite rises and falls over the short-term, mortgage rates are at a historically low-point for now in comparison to years past. They may not drop more than 1 point more and should they do so, you can always refinance your mortgage rates later.
Home Mortgage Refinancing Specific links
Home Mortgage Refinancing News
Mortgage Bonds Face Eye of Storm as Refinancings Decline: Credit Markets - Bloomberg
 Bloomberg | Mortgage Bonds Face Eye of Storm as Refinancings Decline: Credit Markets Bloomberg Refinancing damages securities that trade for more than face value by returning principal faster at par and curbing interest. An expansion of the Home Affordable Refinance Program urged by President Barack Obama is set to boost speeds by 1 or 2 ... As Mortgage Refinancings Surge, Banks Struggle Refinancing homeowners saving big REAL ESTATE: Refinancing expanding for Fannie/Freddie borrowers |
Obama Mortgage Refinancing Plan: A Bailout by Any Other Name - National Legal and Policy Center
 Kansas City Star | Obama Mortgage Refinancing Plan: A Bailout by Any Other Name National Legal and Policy Center The Federal Reserve purchased $1.25 trillion in mortgage securities to keep mortgage rates down. And the Obama administration created the still-operative Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP) to make ... Obama's Refinancing Plan Means Fee for Homeowners President Obama: Helping US homeowners is critical House rules |
BofA Stalls Refinance Work as Wells Is 'Open for Business' - BusinessWeek
 Bloomberg | BofA Stalls Refinance Work as Wells Is 'Open for Business' BusinessWeek The government's Home Affordable Refinance Program, which helps homeowners lower payments, has increased refinance applications and strained capacity at Bank of America, which exited some mortgage lines last year. The US program, now dubbed HARP 2, ... New HARP Could Help Up to 6.7 Million BofA Said to Put Off Refinancing Clients as U.S. Spurs Demand MBS Prepayments Suggest Slow Uptake On Government's HARP |
Mortgage refinancing is on the rise - Washington Post (blog)
 Christian Science Monitor | Mortgage refinancing is on the rise Washington Post (blog) According to the Mortgage Bankers Association, mortgage refinancing is on the rise, increasing 9.4 percent over the previous week and 5.7 percent over the past month. He also predicts that the changes the White House recently made to the Home ... Mortgage applications jump on refi demand: MBA Mortgage rates: How low can they go? Mortgage Refi Activity Ramps Up in U.S. as Rates Continue to Drop |
Obama Said to Plan Assistance for Home Mortgage Refinancing - San Francisco Chronicle
 Wall Street Journal | Obama Said to Plan Assistance for Home Mortgage Refinancing San Francisco Chronicle The president also will reveal a pilot program to sell foreclosed properties in bulk to investors who maintain the homes as rentals, the official said. The pilot will be limited to homes owned by Fannie Mae, the mortgage company under government ... Obama unveils mortgage refinancing plan Obama Seeks Refinancing Aid to Lift Housing Obama Plans Assistance for Rentals, Mortgage Refinancing |