Despite the economic downturn, mortgage rates are actually lower than they have been in the last year or so. Experts predict a possible upturn in the future, but for now banks are rejoicing because of the recent low rate. The average rate for fixed 30-year mortgages was hovering around 3.88%, a significant decline from last year’s rate at 4.80%.
Currently the leader in the low-rate mortgage field, Wells Fargo lowered its interest rates even further this weekend on fixed-rate mortgages, offering locked rates as low as 3.75%. The less popular 15-year FRM (primarily used by those refinancing) is available at a rate of 2.87%. Wells Fargo has remained relatively stable in the last year, maintaining customer satisfaction and trust.
Bank of America
In close second, Bank of America offers fixed-rate mortgages at 3.87%, a fractionally higher number than Wells Fargo. Its 15-year FRM is comparatively low as well; sitting nicely at 3%. However, Bank of America also asks for an annual percentage rate of 3.24%.
Chase has higher fixed rates than both Wells Fargo and Bank of America with its listed lows at 4% for the 30-year mortgage and 3.125% for the 15-year plan. Although Chase is technically third in this comparison, it still managed to raise its rates since last week.
With its lowest rates available still significantly higher than its competition, SunTrust is hardly a top choice when it comes to mortgage rates. For the 30-year plan, it advertises a FRM of 3.99%, which is higher than the national average. The 15-year rate is not much better, close to 3.375% with an annual percentage rate of 3.4%.
With lower rates available, many homeowners are looking into refinancing as a means to relieve the extra burden on their mortgages. The Home Affordable Refinance Program has been a key player in assisting homeowners who are not necessarily behind on payments, but due to declined value of their homes, are unable to refinance for lower rates. HARP helps you acquire a more affordable and stable mortgage for some refinance fees. In order to be eligible for HARP, your mortgage must be owned by Fannie Mae or Freddie Mac on or before May 31, 2009, the current loan-to-value ratio must be greater than 80%, and the borrower must be up-to-date with payments and have a good payment history for the past 12 months.
Home vs. Apartment Vacancies
The fear over mortgage rates and foreclosures may be the reason that homeownership rates have fallen to their lowest since 1997. Reports show that the rate has dropped from 66% in the fourth quarter down to 65.4%. In June of 2004, the level was at 69.2%. Considering house prices and mortgage rates have fallen over the last year, however, it comes as a surprise that consumers would rather rent than own their home. With the decline of homeownership rates, there was an equal fall in apartment vacancy rates. A fall to 4.9% in the first quarter marks an 11-year low, records show. This is down from 9.7% a year earlier. On the subject of vacancies, 18.5 million homes of the estimated 132.6 million homes were vacant in the first quarter according to reports.
It is interesting to note that although the elections are just a few short months away, none of the candidates in the race for presidency have said much about their plans for fixing the housing problems. The primary focus of their campaigning lies in the economics related to health care and in the most general sense, the overall United States debt. It would seem that Barack Obama, Mitt Romney, and Ron Paul, regardless of their political party, have more to say about the state of our economy than the effect it is having on the housing market. As of yet, no solutions have even been proposed.
Politicians may not have to come up with a solution to the housing-market crisis though. Given the recent rise in the housing market, the National Association of Realtors (NAR) has stated that the housing market is officially on the road to recovery as indicated by the latest signing activity and the reduction in foreclosures. Perhaps political intervention will be unnecessary. This of course begs the question: what would happen if changes were made to the market? Should we just leave things the way they are and let the market recover on its own or should we do something to ensure its stability? The combination of lower fixed-rate mortgages offered by the banks in addition to the cheaper houses available on the market may be the saving factor for the housing market. It just goes to show that government intervention is not always necessary in order for things to stabilize on its own.
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