Surging Mortgage Activities Caused By Dropping Interest Rates

[Jun 16, 2008.]

 

In an attempt to save the economy the Federal Reserve is continuing with another round of interest rate cuts. These cuts continue to come as a relief for many home owners looking to refinance in an effort to stave off foreclosure and other financial difficulties.

The Mortgage Bankers Association or the MBA reported a growth of mortgage activity last week averaging around 15%. This comes as a direct result of interest rate cuts which is also affecting the number of people looking to purchase a new home.  Refinancing applications grew 19.3% as well bolstering confidence in the housing market. Many financial experts are choosing to look at these numbers as a source of hope and optimism.

The news is tepid at best however as the credit crunch continues to strengthen making it harder for potential borrowers to find loans. Banks and lending agencies are being far more cautious about who they lend to and how much they lend.

Foreclosure has become a household term over the past year as more and more home owners are defaulting on their payments. Refinancing or taking out a second mortgage has been the answer to many home owners. Refinancing is also done by those wanting to receive more favorable rates which are why this activity sees an increase whenever the Fed makes cuts in the interest rates.

Over the past few months the interest rates have continued to fall as the economy faces the ever growing possibility of a recession. Amidst these fears refinancing is becoming more and more popular while foreclosing grows.

Many are finding it more difficult to receive a mortgage since all loans are becoming harder to find. Those with bad credit are seeing it near impossible to receive any kind of sub prime mortgage loans. The reason for this is that the sub prime mortgage market is facing the largest number of foreclosures and difficulties.

Even though mortgage activities have seen a recent surge the fact remains that the housing crisis is far from over