Rising Mortgage Rates & Declining Mortgage Applications

Mortgage rates are on the rise again hitting a seven week high for fixed rate mortgages. As the mortgage rates continue to increase, mortgage applications for refinancing begin their steady decline.

The 30 year fixed rate mortgage rose 0.32 of a percent just this week alone and now sits at an average of 6.04 percent. The 15 year fixed rate mortgage climbed 0.39 of a percent stabilizing at an average of 5.64 percent.

With mortgage rates on the rise, mortgage applications have fallen in dramatic fashion by 22.6 percent last week. With mortgage rates even higher this week the number of mortgage applications is surely to fall once again.

With the Fed expected to cut mortgage rates again in March many homeowners are waiting and hoping to take advantage of another dip in mortgage rates. The reality is, even if the Fed does cut mortgage rates it does not necessarily mean that mortgage rates will decrease. When the Fed cuts rates they are cutting the rates at which banks lend to one another.

With banks and lenders losing money like wildfire on mortgage investments, it is likely we will continue to see mortgage rates increase, even with the Feds cutting rates. It is also expected that banks and lenders will tighten their lending guidelines even more and raising rates so they may get a better grip on the mortgage industry.

Submitted by admin on 2/22/08






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