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Mortgage Rate Forecast For May 2008
With the Fed cutting interest rates by a quarter of a percent to end April, mortgage rates in May should get off to their strongest hold at the beginning of the month. The real estate industry is still very volatile which could send mortgage rates off to the races.
Freddie Mac released their updated Primary Mortgage Market Survey on May 1st and it showed that the average for a 30 year fixed rate mortgage had risen from the previous week by 0.03 percent. The rate for the mortgage loan now stands at 6.06 percent, which will likely be its low point for the month.
The 30 year fixed rate mortgage is generally most popular among 1st time homebuyers and by 1st and 2nd time refinancers. With these categories leading the nation in defaults and foreclosures investors need more insurance from lenders that the borrower is overly qualified. With the Fed cutting interest rates, lenders are taking advantage of their opportunity to earn more with little risk by tightening credit standards.
The 5 year adjustable rate mortgage is the other mortgage loan that saw an increase from the previous week. The mortgage loan averaged 5.73 percent for the week, up 0.05 percent. Mortgage consumers are attracted to this program over a 30 year fixed rate mortgage due to the initial “teaser” rate. Guidelines to qualify for this loan are mainly focused around the homes value compared to the dollar amount being borrowed on the home, debt to income ratios and credit worthiness.
The average for the 15 year fixed rate mortgage showed improvement for the week ending May 1st. The mortgage loan dropped 0.03 percent from the previous week to 5.59 percent. This mortgage may be where the strength in the housing market is. Most consumers taking out 15 year fixed rate mortgages are consumer who have been in their home for a while and have gained equity in their homes, which makes them the borrowers that are less likely to default.
Unchanged for the week is the one year adjustable rate mortgage at 5.29 percent. This mortgage loan is virtually obsolete to many mortgage consumers as long as rates remain volatile and home values continue to decrease.
With inflation on the rise, mortgage rates should continue an overall upward trend for all mortgage loans. The 30 year mortgage rate is the most volatile mortgage loan available, making it the mortgage loan that should increases the most throughout the month.
The 15 year fixed rate mortgage has been the strongest mortgage investment for lenders and investors. Despite that fact, the mortgage loans rate will likely increase throughout the month due to inflation concerns. The spread between mortgage rates on the 15 year fixed rate mortgage should be less significant than the 30 year fixed rate mortgage.
The 5 year and 1 year adjustable rate mortgages may see a slight decline somewhere in the middle of the month but they should still end the month higher than where they currently sit. Inflation, once again, is the reason for a rise in all mortgage rates through out the month of May.
With the Fed cutting interest rates by a quarter of a percent to end April, mortgage rates in May should get off to their strongest hold at the beginning of the month. The real estate industry is still very volatile which could send mortgage rates off to the races.
Freddie Mac released their updated Primary Mortgage Market Survey on May 1st and it showed that the average for a 30 year fixed rate mortgage had risen from the previous week by 0.03 percent. The rate for the mortgage loan now stands at 6.06 percent, which will likely be its low point for the month.
The 30 year fixed rate mortgage is generally most popular among 1st time homebuyers and by 1st and 2nd time refinancers. With these categories leading the nation in defaults and foreclosures investors need more insurance from lenders that the borrower is overly qualified. With the Fed cutting interest rates, lenders are taking advantage of their opportunity to earn more with little risk by tightening credit standards.
The 5 year adjustable rate mortgage is the other mortgage loan that saw an increase from the previous week. The mortgage loan averaged 5.73 percent for the week, up 0.05 percent. Mortgage consumers are attracted to this program over a 30 year fixed rate mortgage due to the initial “teaser” rate. Guidelines to qualify for this loan are mainly focused around the homes value compared to the dollar amount being borrowed on the home, debt to income ratios and credit worthiness.
The average for the 15 year fixed rate mortgage showed improvement for the week ending May 1st. The mortgage loan dropped 0.03 percent from the previous week to 5.59 percent. This mortgage may be where the strength in the housing market is. Most consumers taking out 15 year fixed rate mortgages are consumer who have been in their home for a while and have gained equity in their homes, which makes them the borrowers that are less likely to default.
Unchanged for the week is the one year adjustable rate mortgage at 5.29 percent. This mortgage loan is virtually obsolete to many mortgage consumers as long as rates remain volatile and home values continue to decrease.
With inflation on the rise, mortgage rates should continue an overall upward trend for all mortgage loans. The 30 year mortgage rate is the most volatile mortgage loan available, making it the mortgage loan that should increases the most throughout the month.
The 15 year fixed rate mortgage has been the strongest mortgage investment for lenders and investors. Despite that fact, the mortgage loans rate will likely increase throughout the month due to inflation concerns. The spread between mortgage rates on the 15 year fixed rate mortgage should be less significant than the 30 year fixed rate mortgage.
The 5 year and 1 year adjustable rate mortgages may see a slight decline somewhere in the middle of the month but they should still end the month higher than where they currently sit. Inflation, once again, is the reason for a rise in all mortgage rates through out the month of May.
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Submitted by admin on 5/03/08 |