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12 Aug 09 Mortgage Loan Application Activity Slowing

According to the Mortgage Bankers Association home loan rates hopped last week and the response was less mortgage applications. The volume of mortgage loan applications declined 3.5% compared with the previous week.  Home loan applications filed were still up an unadjusted 16.1% for the week ended Aug. 7 from the same week in 2008, according to the MBA’s weekly survey. The survey covers about half of all U.S. retail residential mortgage applications.   FHA mortgage applications filed last week to purchase homes rose 1.1% from the week before. Volumes for conventional, VA and FHA loan applications were all lower than expected.

Mortgage refinancing applications to refinance existing mortgages decreased 7.2%, on a week-to-week basis, reversing the 7.2% increase during the week ended July 31, according to the Washington-based MBA. The four-week moving average for all mortgages was down 0.7%. Home refinancing applications made up 52.3% of all applications last week, down from 54.2% the previous week. ARM mortgage loans accounted for 5.8%, up from 5.4%.

According to the MBA survey, thirty-year fixed-rate mortgage loans carried an average interest rate last week of 5.38%, up from 5.17% the week before. As for 15-year fixed-rate mortgages, the average rose to 4.71% last week, up from 4.60% the week before. And 1-year ARMs averaged 6.71% last week, up from 6.67% the week before.

To obtain mortgage interest rates this low, borrowers are charged of an average 1.125 points when locking a thirty-year fixed-rate home loan.  Loan officers typically refer to these lending costs as “points.” A point is 1% of the entire mortgage amount and it is considered prepaid interest for disclosure purposes.  Sign up and have the latest mortgage news emailed to you with mortgage rate alerts and special lending offers when they arise.

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23 Jul 09 Fed Chief Talks Mortgage Rates and More

Today on Capitol Hill, Fed Chairman Ben Bernanke continued his testimony before Congress and is taking a lot of heart from many of the Senators are questioning some of his past action and future plans.  The Fed chief reiterated his stance that mortgage rates would remain low for the near future in an effort to stimulate the struggling housing sectors across the nation.

Many Senators, both Democrats and Republicans alike are questioning his prior handling of the subprime mortgage debacle, the financial crisis and his failure to act in a timely manner to avert this crisis, his balking at independent audits of his actions and his apparent belief that the Feds should have even more power than they have now.  Congress and the Obama Administration are not subject to home foreclosures, charge offs or bankruptcies.

When Wall Street gets nervous, mortgage interest rates tend to benefit and that is the case today. As investors sell off stocks and buy bonds, mortgage rates do well. There is very little change from the close of business, as regards mortgage rates today, but no news is good news. We saw rates drop substantially yesterday, close to the lows we saw earlier this year. 

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20 Jul 09 Current Mortgage Rates

Current mortgage interest rates are up this past week brought on by higher Treasury rates, 10-year U.S. Treasury rates rose from about 3.30 % to 3.65 % this week. Today’s mortgage interest rates remain historically low.  The low rates home mortgages are slowly starting to resurrect the home purchase market.  Home-buyers are being lured back to the housing market slowly, but surly with the Federal Reserve looking to end the nationwide housing crisis. Low rate mortgage loans are also igniting home refinancing activity. Last week, the Mortgage Bankers Association reported that the Refinance Index rose 17.7% from the previous week on a seasonally adjusted basis.

Another index released this past week further supports the fading of housing and subprime mortgage crisis. The National Association of Realtors released their Pending Home Sales Index which showed a slight increase in May 2009. The increase was only 0.1% but it was the fourth consecutive monthly increase which hasn’t happened since October 2004.  Mortgage Related News continues to refer visitors to mortgage brokers and lenders offering free mortgage rate tables based on your state and neighborhood lending postings.

Adjustable Mortgage Rates
Adjustable mortgage rates were mixed this week. The average rate for a one-year conforming ARM decreased to 4.51 % from 4.55 % the prior week. Jumbo one-year ARMs increased to 5.24%, up from the prior week’s average rate of 5.20 %.

Three-year ARM mortgage rates (conforming) decreased to 4.64% this week, down from last week’s average rate of 4.66%. The average mortgage loan rate for a jumbo three-year ARM is at 5.32%, up from the prior week’s average home mortgage loan rate of 5.30%.

Five-year Adjustable Rate Home Loans (conforming) were all over the map this week from several lending sources like Freddie Mac, MBA, Bank Rate and Bloomberg. Five-year ARMs are averaging 4.53%, down from last week’s rate of 4.57%. The average (jumbo) 5-year mortgage rate rose to 5.42% from the previous week’s average rate of 5.34%.

The average interest rate on a seven-year adjustable rate mortgages rose. Conforming seven-year ARMs are averaging 5.14 %, up from 5.00% the prior week. Jumbo seven-year adjustable mortgage rates increased to 5.95, up from last week’s rate of 5.90%.

10-year adjustable rate home mortgages were mixed. Conforming 10-year ARMs are at 5.47 % this week, up from the prior week’s average mortgage rate of 5.30%. Jumbo 10-year ARMs averaged 6.26%, down slightly from 6.28%.

Smart Home Equity reported interest rates for home equity loans and home equity lines of credit remain unchanged.  Slight increases and decreases were reported from Lenders offering HELOC’s and fixed rate equity mortgages.

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02 Jul 09 Trend Upward for Mortgage Rates

The average rate on a 15-year fixed mortgage dropped to 4.81 % from 4.93 % the prior week. The rate on a one-year adjustable mortgage loans decreased to 6.52 % last week from 6.54 %, according to the mortgage bankers.  Home loan rates tracked by McLean, Virginia-based mortgage buyer Freddie Mac climbed along with Treasury yields through late May and early June on investor concern that a greater supply of government debt being sold to fund federal spending would fuel inflation.

This year the Federal Reserve purchases of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae brought down the yields on those securities, allowing lenders to reduce rates on new home loans and still sell them at a profit.  Still, rising foreclosures that sell at discounted prices are flooding the market and depressing home values, according to Lawrence Yun, chief economist of the Chicago-based Realtors’ group. This year the number of foreclosures may rise to 2.5 million, the highest on record, Yun said.

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23 Jun 09 Thirty Year Mortgage Rates Continue to Rise

Mortgage interest rates on U.S. 30-year fixed-rate mortgages rose to 5.57 % a few days after hovering around 5.47% earlier in the week.  According to Zillow Mortgage the rate are down sharply from the previous week when mortgage rates were reported nationally with an average of 5.76% on home loans that were fixed for thirty years.

Conventional and FHA mortgage rates have remained historically low in 2009 and most industry insiders believe that interest rates will maintain low levels for the remainder of the year and into 2010 before climbing with the forecasted inflation. The higher mortgage rates reflect a rise in yields on U.S. government bonds, which are linked to the mortgage market.  The mortgage rate, however, is sharply higher than the roughly 5.00% level seen at the end of May and at the beginning of this year, Zillow said. 

Home loan refinancing activity has dropped precipitously in recent weeks. A move higher in FHA mortgage rates should further dampen demand.  According to Lawrence J. White, professor of economics at New York University’s Stern School of Business, “Higher mortgage rates are certainly an impediment to a U.S. housing market recovery, but other factors are also suppressing demand.  “People are worried about the overall economy, how secure their jobs are as well as their overall financial status,” he said.  “So, while higher mortgage rates matter, they are not the sole driver of housing demand,” he said. 

The applications for mortgage refinance loans dropped as expected, but loan modification requests rose significantly as bad credit mortgages are beginning to reset to the higher adjustable interest rates that have homeowners around the nation fighting to keep their home from foreclosure.  The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source of and a major casualty of the credit crisis.  A setback for the market could hamper a turnaround of the U.S. economy.

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01 Jun 09 Mortgage Rates Spike

A significant rise in mortgage rates is threatening to undermine the already shaky real estate market and toss sand into the gears of the Government’s plans to rescue the economy. Beginning last fall, the Federal Reserve rolled out a series of initiatives–such as the purchase of Fannie Mae and Freddie Mac mortgage-backed securities and long-term treasury bonds–that worked to drive mortgage rates down to all-time lows. Federal officials hoped that by pushing the cost of purchasing a home artificially lower, they could lure more buyers into the market to gobble up the massive supply of unsold homes. Meanwhile, lower mortgage rates could also enable scores of homeowners to lower their monthly payments by refinancing. That, in turn, would free up cash to be pumped back into the economy. For some time, the mortgage market acted accordingly, with rates of less than 5 percent triggering a flood of refinancing applications. But last week, rates surged, a development that could create all sorts of headaches for federal officials, consumers, and the economy as a whole.

Here are five things you need to know about the surge in FHA mortgage rates:

1. The jump: Thirty-year fixed mortgage rates had been holding in the 5 percent range since mid March, averaging 5.03 percent on Tuesday, May 26. But rates jumped in the following days, hitting an average of 5.44 percent on Thursday, May 28. By midday Monday, rates had fallen back a bit, to 5.36 percent, according to HSH.com.

2. Key Factors: Fixed mortgage rates have been pushed higher by a surge in 10-year Treasury note yields, which climbed to 3.67 percent on June 1 from 2.68 percent on April 1, according to Bloomberg news. (Fixed mortgage rates typically track the yields on 10-year Treasury notes.) A number of factors have worked to increase Treasury yields. Nascent optimism about the economy has made ultra-safe investments like Treasuries less appealing. “If you look at the broad aggregate of economic data, it’s not great but it’s better on balance,” says Keith Gumbinger of HSH.com. “So the Treasury market especially is going to be moving away from those emergency and panic modes we’ve been in now for 6 months.” In addition, concerns about deflation are giving way to worries about inflation, he says. However, the bulk of the pressure is coming from concerns about the massive amount of government debt needed to finance the Obama administration’s huge bailout and stimulus programs that encouraged lenders to offer loan modification plans to qualified borrowers..

3. Home purchase impact: It’s important to remember that thirty-year, fixed rate for bad credit mortgage loans of 5.36%, 5.5% are still incredibly low by historic standards. Still, higher rates have the potential to force home prices lower to compensate for the higher purchasing costs. “If [the higher rates are] in place for a while it could have the effect of putting some additional pressure on home prices,” Gumbinger says.

4. Mortgage refinancing impact: But the impact on the mortgage refinancing market could be more significant. Rates in the 5.5% range would evaporate roughly 65% of home refinancing demand because the higher rates don’t offer enough savings to make the transaction worthwhile for many consumers, says Mark Hanson, a managing director who handles real estate and finance research at the Field Check Group. “Why would you want to pay $5,000 to close a loan when you are saving $20 or $30 a month,” he says. “It’s just not enough.” Even more concerning, many consumers have already filled out mortgage applications without locking in their mortgage rates because they expected rates to drift lower before closing. The recent spike in FHA mortgage rates, however, has made many of these yet-to-be-closed, non-locked loans unsalvageable without a sharp drop in rates. “Of all the applications in, 60 to 70% are [not locked],” Hanson says. “Out of those, 75% are dead.”

5. Federal response: Given how aggressively the federal government has moved to bring mortgage rates lower, it’s possible that Uncle Sam will step in to the market again. “I expect some sort of intervention,” Hanson says. Federal intervention could take any number of forms, including plans to beef up its already expansive mortgage-backed security or Treasury bond purchase program.

6. Rate outlook: Gumbinger says the recent spike reflects uncertainty about the broader economy. “We are at the portion of the economic game where you are going to get this kind of fits and starts arrangement,” he says. “Things are rosy one minute, and then somebody is going to catch wind or something and we could run the other way.” He says rates may revisit the 5 percent range in the coming months. “And if we do, know that that may be temporary as well,” he says. “If you really want a 5% number or a high 4% number on your mortgage, you need to be prepared in this market to take advantage of it.

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22 May 09 30-Year Mortgage Rates Creep Up

According to CNN Money, mortgage loan rates were mixed this week, with the average 30-year ticking higher, according to a report released Thursday. FHA rates remain low as new homebuyers are reconsidering their renting options as people know the mortgage rates won’t be this low forever.  With the tax deductibility incentives, many Americans renting are finally seeing some advantages to becoming a homeowner and making a mortgage payment.

The average thirty-year fixed mortgage rate jumped to 5.24%, up from 5.21% the previous week, according to Bank Rate’s weekly national survey. Even with the increase, mortgage rates remain at historic lows, the report said. Mortgage interest rates have plunged since late October, when thirty-year fixed home mortgage rates averaged 6.77%.

“The economy remains very weak, and those concerns are balancing out the worries investors have about the amount of government debt issuance,” the report said, because mortgage rates are closely tied to long-term Treasurys.

Six months ago, the average 30-year fixed home loan rate was 6.33%, meaning a $200,000 loan would have carried a monthly payment of $1,241.86.  With the average rate now at 5.24%, the monthly payment for the same size loan would be $1,103.17, meaning homeowners who refinance now would save $138 per month.

The average fifteen-year fixed rate mortgage fell to 4.74% from 4.76% the week prior.

The average jumbo mortgage rates for a 30-year fixed rate fell to 6.37%.  FHA mortgage rates rose slightly to 5.125% for the weekly average.

Adjustable rate mortgage loans were also mixed, the report said, with the average 1-year ARM falling to 4.94% while the 5-year ARM increased to 4.96%

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18 May 09 Low Mortgage Rates Continue

Mortgage rates were lowered slightly today for conventional and fixed rate FHA mortgage loans.  Mortgage interest rates continued their trend with 30-year fixed rate home loans being reported under 5%.

Average mortgage rates on 7/1 conforming adjustable rate mortgages is now at 4.84 % down from 4.95 %. The average rate on 7/1 jumbo ARMs is at 6.14 % from 6.17%. Average rates on 5/1 conforming ARMs is now under 4.50% at 4.39%, a big drop from 4.52%. Average interest rates for jumbo 5/1 ARMs is 5.38 % down from 5.43%. Conforming 1-year ARMs averaged 4.82% down from 4.88%. Average jumbo mortgage rates for 1-year ARMs is now at 5.74% up from 5.70%.

Interest only adjustable rate home mortgages were also down this past week. The average rate on 5/1 conforming interest only ARMs is now under 4.50 % at 4.45 %.  Average rates on Jumbo interest only 5/1 ARMs are still a lot higher at 5.70 %. Average rates on 3/1 interest only conforming loans is at 4.81% down from 4.92%. Jumbo 3/1 interest only loans now average 5.64% down from 5.70%.

Watch the Analysis and discussion reported by Bloomberg News with Mahesh Swaminathan of Credit Suisse talking about the mortgage interest rates, home loans, loan modifications and mortgage market in general.

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17 Mar 09 Mortgage Rates Lowered

According to Web site Zillow.com. the national average interest rate for a thirty-year fixed rate home loans dropped last week, with Georgia remaining the state offering the lowest mortgage rates. For the week ended March 15th, the nationwide average thirty-year rate was 5.21%, down from 5.28% the week prior. In Georgia, the 30-year rate was 5.05% for the week ended March 15, the lowest in the nation.

By Monday night, the average rate on Zillow’s Mortgage Marketplace dropped again, to 5.05 %. Seattle-based Zillow compiles mortgage interest rates quoted by 4,000 participating mortgage lenders to potential borrowers on its site. FHA home loan rates and VA mortgage rates also continued the trend of rate reduction for thirty year home mortgages.

 

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21 Jan 09 Average Loan to Value Ratios Projected to Hit 109%

Home prices have fallen 18% since 2006 and could drop another 10% in 2009, which means the average mortgage could be “underwater” soon, according to a former Fannie Mae executive who served as the GSE’s chief credit officer in the 1980s. Speaking before the American Enterprise Institute, former GSE executive Edward Pinto said the average loan-to-value ratio on most single-family loans was roughly 95% at year-end 2008.   Even with mortgage rates at record levels, property values continue to decline.  The fear of losing home equity is still real.  

Mr. Pinto, now a consultant, said that figure could rise to 109% at the end of this year, a first. He noted that a 20%-plus drop in home prices has not occurred since the Great Depression when values fell 24% between 1929 and 1933. LTVs, though, were much lower in the Depression. The consultant relies on home price indexes issued by the Federal Housing Finance Agency and S&P Case Shiller in making his price estimates. Mr. Pinto said the government is on the hook for nearly 70% of all mortgages due to its backing of Fannie Mae, Freddie Mac, the Federal Home Loan Banks, the Federal Housing Administration and Federal Deposit Insurance Corp. If Congress passes bankruptcy reform legislation that allows for mortgage cram downs, the government will be “cramming down the loans they are responsible for,” Mr. Pinto said.

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16 Jan 09 Mortgage Refinancing Activity Skyrockets

In a recent USA Today article, Stephanie Armour examines the home refinancing rush, as ecord low mortgage rates have spurred a surge in homeowners wanting to refinance. According to a report from Mortgage Bankers Association, over 85% of new mortgage activity involved refinancing applications.

 

Mortgage lenders are swamped by the giant wave of mortgage refinancing requests.  Many have shed staff the past couple of years as the housing market slumped. Now they lack the manpower to quickly process refinancing requests.  “Lenders aren’t prepared for the surge,” says Mark Zandi of Moody’s Economy.com.   Some lenders are even hiring more people to accommodate the growing demand for refinancing.

 

In a normal market, refinance loans take 50% to 60% of its business.  Many anticipate  the refinancing boom to continue at a rapid pace.”The refinancing wave could become very large,” Zandi says. “There are millions of people with some equity and good credit scores who are now saying, ‘Let’s refinance.’ Home refinancing will increase substantially.”  Many people can’t take advantage of the lower rates. Among them are millions whose houses have declined so much in value that the homeowners owe more money than their homes are worth.  Ken Schimpf, 61, a retired carpenter in Lancaster, California, bought his home for $330,000.   With similar homes in his area now going for about $240,000, he can’t refinance to get a lower interest rate.”It’s a lost cause,” Schimpf says. “It’s very frustrating.  Most reports indicate that not many borrowers have qualified for Hope for Homeowner, which is FHA’s new loan program that enables borrowers who have no equity to still qualify for a refinance loan.

 

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12 Dec 08 Mortgage Rates Drop to 4.5 Year Low

Mortgage interest rates dropped again this week, following the government’s efforts to assist the troubled housing market.  Government sponsored mortgage lender Freddie Mac said Thursday that fixed rates on 30-year mortgages averaged 5.47% for the week ending Dec. 11. That’s down from 5.53% last week and well below 6.11%, which is where the rate stood at this time last year.  Mortgage interest rates began to fall after November 25th, when the administration announced that it would throw another $800 billion into the financial markets to unfreeze consumer credit and mortgage lending.

Specifically, mortgage rates responded to the Federal Reserve’s announcement that it would purchase up to $500 billion in mortgage loan securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It will also buy another $100 billion in direct debt issued by those firms.  Mortgage refinancing rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government’s announcement, down from the previous Monday’s 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted.  “What we’re seeing is a slight continued decline influenced by the Federal Reserve’s announcement to buy half a trillion in mortgage backed securities,” Gumbinger said. “And this continued minor downdraft is also due to the poor economic climate.”

The thirty-year mortgage rate has not been this low since March 25th, 2004 when it averaged 5.40%.  “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release on Thursday.  FHA home loan rates declined as well, so more homeowners should now be able to qualify for a refinance loan that features interest rates fixed in the 5% range.

The fifteen year fixed rate mortgage this week averaged 5.20%, which is down from 5.33% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.78%.   The 15-year rate has not been this low since February 7, 2008, when it averaged 5.15%.  Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.82% this week, up from last week when it averaged 5.77%. At this time a year ago, the 5-year ARM averaged 5.89%.

According to the Mortgage Bankers Association, the one-year Treasury-indexed ARM averaged 5.09% this week, up from last week when it averaged 5.02%. Last year, the 1-year ARM averaged 5.50 percent.  “The housing market still hangs in the balance,” Nothaft said in a release. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0% in October, based on figures from the National Association of Realtors. Meanwhile, conventional mortgage loan applications for home purchases over the week ending December 5th were up 2.0% from four weeks prior, but were still 51% below the same period last year.” Get informed when the interest rates change and get the most updated mortgage rate news online.

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01 Dec 08 Fed Says Lower Mortgage Rates Are Feasible

Federal Reserve Chairman Ben Bernanke said Monday that further mortgage rate cuts are “certainly feasible,” but he warned there are limits to how much such action would revive an economy likely to remain ailing in 2009 and 2010.  The Federal Reserve’s key interest rate now stands at 1%, a level seen only once before in the last half-century. To raise the economy out of a recession that started in December of last year, many economists predict Bernanke and his colleagues will cut the interest rate again at their next meeting on December 15-16.

Bernanke spoke just hours after the National Bureau of Economic Research announced that the U.S. economy has been in a recession since December 2007.  “Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time,” he said.

In his speech, Bernanke noted that the bracing impact of the Fed’s aggressive rate reductions has been somewhat stymied by the worst credit and financial crises to hit the world economy since the 1930s.  Despite reducing home loan costs ordered by the Fed, skittish banks have been reluctant to lend money to people and businesses, a vicious cycle that has seriously hobbled the U.S. economy.  “Although further reductions … are certainly feasible, at this point the scope for using conventional interest rate policies to support the economy is obviously limited,” Bernanke said in the speech. The Federal Reserve can lower its key rate only so far — to zero — and it’s getting ever closer to that threshold.  Bernanke said there are other ways that the Fed might bolster economic activity.  The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, “thus helping to spur aggregate demand,” Bernanke said.  Given the limits to how low the Fed can go in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical — and often unprecedented actions — with the hope of busting through credit jams and getting financial markets operating more normally.  It has ramped up cash and other types of loans to financial institutions, started buying mounds of short-term debt that companies rely on for day-to-day operations like paying salaries and buying supplies, and expanded its emergency mortgage lending program to investment firms.

Just last week the Fed announced two new programs aimed at increasing the availability and lowering the costs of credit card loans, auto loans, student loans and home mortgages.  The Fed last week said it would purchase $200 billion in securities backed by different types of consumer debt. That market essentially froze in October, making such loans harder to obtain while carrying higher mortgage interest rates.  The Fed also said it would spend $500 billion to buy mortgage loan backed securities guaranteed by mortgage companies Freddie Mac and Fannie Mae. They promised another $100 billion to directly purchase mortgage loans held by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. 

Bernanke said the Fed will continue to look for innovative ways to break through the credit logjams.  “We at the Federal Reserve and our colleagues at other federal agencies will carefully monitor the conditions of all key financial institutions and stand ready to act as needed to preserve their viability in this difficult financial environment,” Bernanke said.  In October, the unemployment rate zoomed to 6.5%, a 14-year high. So far this year, 1.2 million positions have vanished. The jobless rate is likely to reach 8% or higher next year.  A student of the Great Depression, Bernanke said the current period of economic woe bears “no comparison in terms of severity” to the 1930s.  Sign up and get the latest mortgage news delivered to you as it happens.

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30 Oct 08 Home Loan Applications Rise as Fed Cut Rates

As the Federal Reserve made another cut in its federal fund rate on Wednesday, the Mortgage Bankers Association reports that pent-up demand and already lowered rates led to a surge in mortgage applications of 17% last week.  FHA home loan activity rose, conventional mortgage activity jumped and home refinancing led the surge.

The Fed’s rate, what banks charge each other on overnight lending, now stands at 1% following a half-point cut made in concert with other countries several weeks ago.  According to mortgage executive Bryan Dornan, “Lowering the mortgage rates was the right thing for homeowners and it could to see the Federal Reserve is doing what it can to help give banks an incentive to lend money.”

Mortgage rates for a thirty-year, fixed-rate home loans dropped to 6.06% from 6.46% two weeks ago, according to mortgage giant Freddie Mac. The MBA reported that home refinance loans accounted for 46.9% of all applications last week, up from 42.6% the week before.

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