Mortgage loan dropped to a ten year low in January 2010, this has been figured out by the Council of Mortgage Lenders (CML) and revealed today. Total mortgage lending dropped an estimated amount £9.1 billion within the month, a 32% drop on December’s figure and 21% lower than the last year January.

However, this downfall was expected at the starting of the year, the down fall of January shifted lending to its lowest level and this is the lowest since February 2000, and brought to ending months of the rising interest rates from borrowers.

The CML stated that the lending aggravated by the traditional post-Christmas due to the flood of buyers to acquire properties before 31st December 2009, the temporary stamp duty holiday end on houses costs less than £175, 000 and it was probably to be the beginning of the quiet period in house marketing.

Read the full story

Mortgage rates went down sharply last week. It is the sharpest decline we have seen over a peed of past few weeks. Home mortgage rates have come down intensively from the peak in June 2009. The most obvious reason for this is that world economy in general and US economy in particular is showing signs of late recovery. Some economic pundits are even saying that we have not seen the bottom yet!

Week Economic Outlook

Amidst of all this week economic data, and poor financial outlook, U.S. Treasury rates have declined significantly. Federal Reserve Bank is in no mood to touch the interest rate in near future. This situation is likely to keep Fed fund’s target rates between zero percent and one quarter of a percentage. U.S. economy is very less likely to rebound swiftly. Even European Union has also moved it forecast for economic recovery to late 2010 or early 2011.

Read the full story

Existing home sales have taken an upwards turn by 6.1 percent in the South this past February. On a national scale, an upwards increase of 5.1 percent has been noted in the month of February as well. Compared to February 2008, the rate is still down by 11 percent.

This information, when matched with the fact that more than 40 percent of the home sales across the US were of foreclosed properties or those in default, can be a major cause for concern. Also, the fact that most of the defaulted properties were sold for less than the mortgage balance, owing to the fact that despite a gradual increase in sale, the prices are still plunging, is another reason for concern.

Across the country, homes are selling for the lowest prices possible, since more expensive homes are not doing as well as the lower priced once, pulling down the median prices continually. In the South alone, the decline in the median prices has been 10 percent less than a year ago, at $146,700 approximately.

Read the full story

It had not been long since we expected that mortgage rates will go up in next few months. The prediction for mortgage rates to go up was made because investors were sidelined and inflation was likely to rise. The downward spiral in home prices and the global financial crisis scared the already shaking investors a bit more. But all is not bad news. If you are planning to buy a home during this crisis, you might strike a deal of your life if the rate for mortgage finance and refinance go down in 2009.All investment pundits are predicting that home finance rates will go down in 2009 compared to 2008. Let’s analyze the main factors or fundamentals of mortgage rates movement. Economic outlook, inflation trend and Government policy… all these factors are signaling that we have lower interest rates ahead of us.

Already the mortgage rates being offered are very very attractive. National average for 30-year Fixed Mortgage has fallen to below 5.6% in December 2008. It is way down from 6.6 percent just 7 weeks before that. following are the main factors that in my opinion will influence the 30-year fixed rate mortgage and 15-year variable rate mortgage. If you act as a wise consumer, you can get great benefits from this knowledge and use it to protect your depleting wealth and equity in your house.

Yes! Mortgage rates will go down in 2009

30-year fixed mortgage rates will start from 5.5% and keep dropping till June 2009. from there as economic conditions in overall economy will start to improve the mortgage rates will move up again and might hit 6.5% by end of 2009.

Still at these rates, getting a home finance loan is not a bad deal. It’s still very attractive loan rate. There is no evidence available to suggest that home finance loan rates are likely to go up as the market is stalling. plenty of inventory is already out there. The economic conditions never change quickly and there will always be a window available to get the best deal on home loans. My prediction is that this window is already open and will remain open till June 2009.

I see 6 Factors that support my 30-year fixed rate mortgage outlook as i predicted above.

1. Deflationary Pressure

2. Global Recession

3. US Government Policy

4. Housing Market Mess

5. Poor Credit Scores

6. Wait and See Attitude

Deflationary Pressure:

With announcement from world bank, world is officially in the worst recession since World War II. Inflation is a thing of past. we are facing worst of deflation in our country. Core consumer price index has fallen sharply (mainly due to lower oil prices). Yields on Govt. securities like bonds and treasury notes in hitting bottom. It is interesting to note that 30-year Fixed Mortgage rates mostly follow 10-year Treasury Notes. Deflation will rule most of 2009. this will help keep the loan rates down.Recession

Recession:

The National Bureau of Economic Research recently announced that the United States did indeed enter a recession in December 2008. While predictions as to the duration and depth of the recession vary, economists at Goldman Sachs recently revised their original forecast in the face of deteriorating economic news. “This deepens and extends the expected recession, bringing the drop in GDP close to the decline seen in 1982 (2.3% in our forecast versus 2.7% then),” the economists said in the report.

Government Policy:

The massive bailout initiatives that governments around the world are now undertaking will undoubtedly lead to renewed inflationary pressures but as we can read the fine print of these spending plans, we are unlikely to see any material effect before first quarter of 2010.

The Mess in Housing Market:

The drop in home prices, mixed with rising mortgage delinquencies and foreclosures, has forced investors to demand higher rate of interest on their investments especially in securities that are backed by home loans. Resulting in increasing spreads — you can clearly see that difference between 10-year Treasury Bond yields and 30-year fixed mortgage rates has increased significantly. Home prices are expected to continue the downward spiral, at least till June, 2009 — and mortgage delinquencies increasing at alarming pace — this “risk premium” would remain High. “We’re not going to get back to the same tight relationship between the 10-year [Treasury] bond and fixed mortgage rates any time soon,” says Bill Cox , a mortgage lender from Illinois.

Poor Credit Scores :

Even if the mortgage rates will remain low in most part of 2009, a large number of people will not be able to benefit from these.(May be this is another reason for rates to be down). People’s credit scores are hitting rock bottom due to increased borrowing and Job situations. 1 in every 15 American is jobless.People who already have adjustable rate mortgage and want to take advantage of lower interest rates are unable to do so. The decrease in housing prices have eroded the home owner’s equity and most of them have negative equity. They are unable to refinance home mortgage loans due to negative equity, meaning they owe more on their mortgage than their home is worth. As a result, they will not be eligible for refinancing. There not a great number of  potential home buyers in the market these days.

Wait and See Attitude:

Even though, the loan rates are attractive today, people are in no hurry. They understand the economy better than year ago and know that 30-year mortgage rates are not likely to go away if they don’t hurry. they know they have enough time. Blogs like ours are helping in spreading the message. People are convinced that home loan rates are low and will remain low for considerable period of time and they can get their sheet together before taking another debt obligation.