Rates for Mortgage Loans Dip Again

Mortgage loans are looking more attractive to many consumers as the third month of 2009 nears its close, with rates hitting record lows. The rates were even lower than the previous records set in January 2009. In fact, interest rates for mortgage loans are lower than they have ever been since Freddie Mac started keeping statistics on them over 35 years ago. The glut of unsold homes continues to weigh heavily on the market and many in the real estate industry are hoping the new rates will spark some movement in the housing sector. It would be nice if all it took to boost the housing sector was low rates. In a post credit sector meltdown reality, however, banks and lending institutions have now instituted stricter standards. They are more risk averse and are not willing to lend as freely as they were just a few short years ago. Borrowers need to have cleaner credit histories and better credit scores to obtain mortgage loans offered by most banks and lenders. Higher down payments are also being required. More and more consumers are applying for mortgage loans, but less and less can now qualify.
Many analysts believe there will continue to be more consumers refinancing mortgage loans than taking on loans for new homes. There are still many buyers who are not ready to invest in real estate when they are not sure when it will recover. Others are simply being cautious in the current economy and are hesitant to take on additional financial burdens like mortgage loans. And some who are interested in purchasing a new home with a mortgage are confronting more scrutiny from lenders than ever before. Consumers who currently own their homes and wish to refinance have to undergo the same scrutiny as new home buyers. A homeowner needs to own more equity in his home now to be eligible for refinancing, in addition to the same high credit score and solid credit history required of a new borrower. Many banks are requiring 20 percent equity. For those in areas of the country hardest hit by shrinking home values, their equity decreased along with their home values. Many who may have had enough equity to qualify for a refinance a year ago may not now. But many homeowners do qualify for refinancing and are taking advantage of the lower rates. After such dismal real estate times, many in the industry welcome any and all action in the real estate and loan industries, whether it is due to refinancing existing homes or purchasing new ones.