Will Lower Interest Rates Alter Your Mortgage Plans?

by Heindrick So
December 14th, 2008

Just a few months ago in October, rates for 30 year fixed mortgages hovered right around 6.5 percent. As the Federal Reserve continues to invest in mortgage backed securities from Fannie and Freddie, interest rates on these conventional loans have been expected to fall well below the current 5.5 percent marker. Many have even been speculating mortgage rates as low as 4 and 4.5 percent.

Consumers Waiting in Anticipation
While interest rates for FHA are based differently, increased mortgage activity would still spill over to FHA given the tight equity requirements of Fannie and Freddie. But while lower mortgage rates have been expected to stir up mortgage activity, one of the recent twists has been an actual decline in activity. According to the Mortgage Bankers Association and FHA’s recent Outlook report, the numbers of FHA purchases have declined slightly since the beginning of this month.  

Although speculation of lower interest rates has sparked consumer curiosity, it’s been a fair assessment that the anticipation has put many consumers’ mortgage plans in a type of holding pattern.

Take Advantage of Lower Rates With FHA Streamline Refinance
While the streamline refinance has been available for many years, the recent decline in mortgage rates has sparked the interest of many existing homeowners. With FHAs streamline refinance program, refinancing your mortgage becomes a much easier process. Depending on the lender, you may be able to refinance your FHA home loan without the hassle of certain appraisal and documentation requirements.

First Time Home Buyers and Purchases Still Top Priority
One thing to keep in mind is that purchases and new home buyers are the top priority. As home builders and banks are stuck with large inventory of homes, these lower mortgage rates are primarily intended to help get these homes moving. So while it may be wise to keep an eye on the upcoming interest rate changes, don’t be disappointed if many of these mortgage rate discounts are geared towards new purchases. 

We’re always interested to hear the “real story”, so feel free to leave a comment on how these changing interest rates have affected your mortgage plans.  If you’re waiting, how long are you willing to play this waiting game to see if rates improve? Or have some of you already decided to take advantage of these rates before they disappear? Share your story with us, and let us know in the comments section below.

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This entry was posted on Sunday, December 14th, 2008 at 7:10 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

3 Responses to “Will Lower Interest Rates Alter Your Mortgage Plans?”

  1. Vergie Says:

    Just stopped by, nice blog!

  2. c ice Says:

    i have over 1.2 M in equity in 2 homes leased and paying all debt service and another home mortgaged with about 20% equity still remaining after the housing slump. I pay all obligations on time and Still I cannot get a loan of less than 50 value on a 4plex of rental units that is free and clear and fully leased – with income DOUBLE the amount of the payment on the loan I am requesting !!

    I am trying to do this loan to pay off unsecured debt (credit cards) that have raised interest rates to 29%! I have income – which the lender says does not “qualify” under the NEW RULES. Is my own country going to force me into a bankrucptcy situation when I can no longer pay the Increased 29% interest? AND I have well over $1.2 million in CURRENT VALUATION EQUITY in fully leased and paying assets? This is INSANE!

  3. c tynes Says:

    what help is available?

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