The mortgage market scenario in the second quarter of 2010
Mortgage rates are at historic low in the present times. The rates have further dropped in the last week of June, 2010 from the previous weeks. This condition may help consumers to take out mortgage loans or refinance their existing mortgages with comparatively lower interest rate loans. Read on to get an idea about the mortgage market condition in the second quarter of 2010.
The 30-year mortgage rates have fallen down to about 4.49% (in the last week of June) from about 4.53% (in the week before). Likewise, the interest rates on 15-year FRMs (Fixed Rate Mortgages) have dropped down to about 3.97% (in the last week of June) from about 4.04% (in the previous week). The interest rates on 5/1 ARMs (Adjustable Rate Mortgages) have fallen down from 3.5% to about 3.44% during the same time period.
In July, 2010, the interest rates on 30-year FRMs in Dallas, Texas are about 4.68% and the rates on 15-year FRMs are about 4.22%. The interest rate on a 5/1 ARM is about 3.5% and it is about 3.66% on a 7/1 ARM. People living in Dallas can get mortgage loans on these rates if they don't want to pay any point upfront. The rates may get further reduced if they pay some points on the mortgage loans.
The Weekly Mortgage Applications Survey conducted by the Mortgage Bankers Association reveals the fact that the Market Composite Index (a measure of the volume of mortgage loan application) has increased about 8.8% (in the last week of June) on a seasonally adjusted basis from its previous week. During the same time period, the Index has increased about 8.3% on an unadjusted basis. The Refinance Index has risen to about 12.6% from the week before. It is the highest Refinance Index since May 2009. However, the Purchase Index has dropped to about 4.1% (in the last week of June) from its previous week. The purchase mortgage applications have decreased to about 15% (in the month of June) as compared to May 2010.
Obama administration has extended the closing deadline of the homebuyer tax credit from June 30 to September 30, 2010. However, in most of the states, the consumers who have already entered into a binding contract by April 30, 2010 are only eligible to get the tax credit if they close on the home loans by September 30.
The above mortgage market scenario indicates that more people are applying for refinance mortgage loans in order to take advantage of the record low rates. The consumers are eager to refinance their existing mortgages in order to make their monthly home loan payments more affordable. However, consumers are not applying much for purchase mortgage loans. It may be due to the fact that the consumers have already taken advantage of the first-time homebuyer tax credit and have entered into a binding contract by April 2010. However, experts are of the view that low mortgage rates will continue for sometime that in turn, may result in increased purchase mortgage applications in the near future.
Samantha Taylor is the Community Mentor of MortgageFit and has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry. Few of her popular articles would include names like 'Mortgage that you can afford' , ' Mobile Home Loan with Bad Credit' , and ' How much mortgage can I borrow"?
