Factors to Ease Foreclosure
June 30th, 2009 | by admin |The domestic economy has been experiencing a downward turn since last year. It all started in the real estate business. Almost every day, foreclosure news has been a constant issue in almost all business sectors. It made a domino effect on other aspects of consumer spending even reaching and affecting economies of other countries of the world. Housing prices in the US are still high and higher interest rates are adding up to the severity of the situation.
According to the GMAC, one of the country’s major lenders, the loan volumes that they receive on homes at the present are about 75% lower even mortgage rates were at its lowest several months ago. This is a sign that the housing market in the US is in its worst state since the Great Depression.
Back in April 2009, pending home sales have risen to 6.7%, the biggest leap since October 2001, according to The National Association of Realtors. This is a good sign that US housing markets are stabilizing. But the constant rise-and-full of mortgage rates is also a major factor in achieving full stability. For instance, the GMAC registered around $1 billion of mortgage rate-locks per day when there was a 4.6% interest rate on a 30-year fixed-rate mortgage about 2 months ago. But earlier this month, they have only registered a total volume of $215 million a day when the interest rates were up to 5.15% earlier this month.
Late November, the Federal Reserve revealed its plan of buying mortgage-backed debt and since then, it has lowered interest rates on 30-year mortgages. Still, they would need to hasten up if they would need to make purchases to further lower down interest rates. If not, we may hear more foreclosure news in the coming months.
In most markets, housing prices have declined sharply and made them more affordable to buyers. This is also backed up by the fed’s first-time home buyer tax incentive of $8,000. But the 8.9% rise in unemployment, the highest in more than 25 years, is doing further damage to the country’s economic activity.
Unless these interest rates go down, we are not going to be out of the woods. We will continue to hear foreclosure news to the hundreds of thousands and even to the millions.
