The interest rates on mortgage loans have been moving in a downward direction for the past few years. Recently, the rates even fell below the five percent mark, coming in at about 4.92 percent on average for a 30-year fixed rate loan. This leaves many financial experts and consumers alike wondering if the interest rates on mortgages have finally reached rock bottom. Unfortunately, there is no crystal ball revealing this information, but you can take a look back on the behavior of interest rates to come to your own conclusion as to what rates will do during 2011.
The lowest point for the interest rates on mortgage loans was in the middle of November in 2010. After reaching the lowest point for the year, interest rates continued to go back up for the remainder of the year. According to HSH Associates, which publishes information on mortgage loans and other consumer loans, “There is a good chance we have peaked, give or take a few basis points” when speaking about interest rates.
The Mortgage Bankers Association predicts that the average 30-year fixed rate on mortgage loans will reach 5.1 percent by the end of 2011. The organization’s predictions also reach into 2012, when it predicts that the 30-year fixed rate will increase again up to 5.7 percent. According to the chiefe economist of Freddie Mac, Frank E. Nothaft, “While some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5 percent” throughout 2011.
Free online software for the creation of personalized mortgage modification applications under the federal Home Affordable Modification Program (HAMP) and other lender programs is now available from FreeMortgageFix.com. Borrowers can complete an application to modify existing home loans via the site’s user dashboard.
According to Jonathan Ende, CEO of FreeMortgageFix.com, “by using our free online program, homeowners now have a quick and dependable option for dealing with unaffordable monthly payments and the threat of foreclosure. As this concern continues to escalate nationwide, we wanted to provide an equally affordable and helpful solution that can help turn families’ lives around in less than 15 minutes.”
Based on the borrower’s specific financial situation and lender, FreeMortgageFix.com software completes more than 100 different calculations and analyses to compile a customized report.
After the site confirms the homeowner’s debt-to-income ratio, net present value, and general eligibility, the appropriate lender forms are automatically populated and printed for submission with a customized cover sheet addressed to the lender.
Homeowners are also provided with tips, solutions, and warnings, as well as an online resource center, custom document checklists, a conversation log for maintaining notes on all discussions with the lender, and a to-do list manager.
External financial and legal assistance is also available if users require them, including a network of approved attorneys.
Residential mortgage refinances are expected to deteriorate over the next two years due to factors not limited to rising interest rates. Some are predicting that mortgage refinancings, in fact, will fall by 77% by 2012 and drag down the overall market for originations.
Total refinances hit about $1 trillion in 2010 and accounted for 69% of the market share for originations, according to the Mortgage Bankers Association. The trade association is predicting that will drop more than two-thirds to just $352 billion and comprise of 36% market share in 2011.
MBA anticipates only $236 billion worth of refinances to take place in 2012.
Mortgage purchases will not make up for the losses in the refinance sector, according to the firm’s numbers. Purchase originations are expected to increase to $614 billion from $473 billion in 2011 (up 30%), bringing the total originations for the year to $966 billion.
In 2010, origination transactions summed $1.5 trillion, which means a nearly 36% drop in overall residential lending activity.
MBA Senior Vice President and Chief Economist Jay Brinkmann said rising mortgage rates will filter the market for refinances, and that repurchase requests from Fannie Mae, Freddie Mac and mortgage insurers will also impact the market.