The mortgage industry received yet another bad news when rates for the 15- and 30-year mortgages rose to 5.42% and 5.88% respectively, for the week ending last April 3. Considering the problems in the housing market, the increase in the mortgage rates is a severe blow especially for buyers who are already having a hard time getting approved for financing.
On the other hand, rates for shorter-term mortgages have decreased. The 5-year adjustable rate mortgage rate dropped to 5.59% while the rate for the 1-year adjustable rate mortgage dipped to 5.19%.
Last year, rates were actually higher. The 30-year mortgage rate was 6.17%; the 15-year mortgage was 5.87%; the 5-year ARM was 5.92% and 1-year ARM was 5.44%.
The increase in mortgage rates came as a surprise since the federal government has been working real hard to keep the rates down. In fact, this is the first time that the Feds has admitted the possibility of a nationwide recession. The last time this happened was in 2001. With problems arising from the housing, financial and credit sectors, it is only natural that home buyers and investors are being extra careful when it comes to making investment decision.
The housing crisis that fuels the recession fears was the result of reckless underwriting practices during the last housing boom. Aggressive brokers and lenders convinced home buyers to choose hybrid loan packages that include offers like interest-only payment, no down payment scheme and adjustable interest rates. Unfortunately, many of these buyers failed to pay their mortgages when the interest rates started re-setting and their mortgage dues included partial payment for the principal amount as well.
The end result is millions of foreclosure properties for sale in the market. These foreclosed homes are actually generating much buyer interest since they are sold at a relatively lower price. If you are interested in saving much money, you should check out foreclosure deals offered by reputable brokers like Foreclosure-Support.
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