For a majority of 2010, mortgage rates have been teetering at the under five percent mark. The "haves" who had the means to tap into tempting refinance offers have already done so and refinancing again would be too expensive.
Borrowers with great credit histories, plenty of home equity and steady paychecks typically jump at low home loan opportunities. Stricter lending practices in the home loan industry is preventing many of them for qualify for the bargain interest rates.
Until the mortgage meltdown, lenders were lax in their loan practices. In direct response to the crisis, lenders are only working with consumers who have exceptional credit and large down payment amounts, not everyone can meet the tougher standards. Additionally, many interested refinance applicants simply cannot qualify as their loans are currently underwater.
The drop in mortgage rates has generated more consumer interest, but loan activity is about fifty percent of what is what in early 2009. Overall, home lending activity is about 30 percent less than summer of 2005 numbers.
Unemployment Limits Mortgage Loan Approval
The nation's 'have-nots' are presently growing in numbers as unemployment claims have skyrocketed to their highest point since March. The claim growth is being blamed on the expiration of the flood of temporary census jobs that took effect earlier this year and not enough job creation.
Those who are unemployed are financially unprepared to take advantage of the low mortgage rate savings. With the combination of the housing market slump and worldwide economic trouble, the United States cannot fully rebound.
What's Next for Mortgage Rates?
Since the financial crisis hit, Federal Reserve chief, Ben S. Bernanke, has proactively kept interest rates low to stimulate more business in the lending sector. Although it was predicted that higher interest rates were coming in a matter of seconds, those visions have been tamed by reality.
Mortgage rates started to climb again in April, making the newest interest rate drop a startlingly change. Until the recent rate offers, industry insiders expected rates to rise and stabilize as the "Federal Reserve ended its program to lower rates by buying up mortgage-backed securities" (Associated Press).
The current trend will help keep interest rates low in the immediate future, but at the next sign of economic recovery, interest rates will start rising.
