The Obama administration is attempting to encourage more people to make use of as program, allowing borrowers with loans backed by Freddie Mac and Fannie Mae, to refinance their properties up to 125% of the value. In order to qualify for new mortgage rates; borrowers must have maintained their current payments. Reports from the Mortgage Bankers Association indicate that over three-quarters of applications now received are for refinancing.
This latest step by the Federal Reserve to add support to the economy means that a 30-year fixed rate loan can be obtained with mortgage rates interest at below 4%. However good this appears, one important question arises as to how many people are in a position to buy or refinance a home? Statistics presented reveal that has mortgage rates recently dropped towards the 4% mark; homeowners were refinancing their homes only in moderate numbers. The figures show that it was about half the volume as seen in the early part of 2009, when mortgage rates went beneath the 5% barrier.
It is generally accepted that many people cannot meet the stringent lending standards imposed following the housing debacle and bank bail-outs. Alternatively, homeowners owe significantly more than their property is worth, making them unable to negotiate new loans at better mortgage rates. These record low mortgage rates are inspired by the Federal’s recent announcement, to take measures that would decrease long-term interest rates, including mortgage rates. Looking at the prevailing conditions, it certainly worked.