Mortage Rates Today Help Continued Gradual Healing of Housing Market
A recent report by Fannie Mae’s (FNMA/OTC) Economic & Strategic Research Group shows cautious optimism that the gradual recovery of the housing market will continue thanks to record low mortgage rates today and record low home affordability. With current mortgage rates on 30 year conforming loans just above 3.50 percent home buyers in many areas of the country are finding the monthly cost of owning a home is one again cheaper than renting.
Homeowners are also taking advantage of record low refinance rates today and refinancing to a lower rate loan. Just this past week the Mortgage Bankers Association reported that FHA refinance volume exploded to an all-time high. A recent lowering of FHA premiums on streamlined refinance home loans came into effect last week and borrowers jumped on the opportunity to refinance to a lower refinance rate without increasing their FHA premiums.
In Fannie Mae’s report cautious optimism that the housing market will continue to do well since home sales are up 8 percent year over year even with a low growing economy and all the negative economic news recently released.
A housing recovery faces many headwinds, including high unemployment with slow employment growth expected for the next couple of years. A steady steam of foreclosed properties coming on the market which will keep a lid on home prices for the next several years.
Rising student loan debt with the possibility of interest rates doubling on federal student loans for 7.4 million college students. Thankfully congress appears to be closing in on a compromise with the Obama Administration which will prevent the interest rate from doubling come July.
Until unemployment comes down from over 8 percent and consumer sentiment increases the housing market will struggle. On a positive note the Federal Reserve is doing everything it can to drive mortgage rates lower to help housing recover from the worst bust since the depression of the 1930's.
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