Mortgage Rates Boost Lending
Mortgage rates fell to almost record lows this week and mortgage lenders on the Grand Strand said it has led to a little more interest in refinancing and home loans.
The average rate on a 30-year fixed rate mortgage dropped to 4.78 percent this week, just above the record low of 4.71 percent in December, according to the mortgage company Freddie Mac. Low interest rates, even a half point difference, can translate to tens of thousands of dollars in savings over the course of the loan.
In the past two weeks there has been a dramatic increase from the previous month. The refinancing and new mortgage loan applications have more than doubled.
While the interest in refinancing has increased, not everyone is eligible to refinance, especially borrowers whose property values have dropped considerably. Those borrowers could have to put a lot of money into getting a new loan.
The lower mortgage rates do help more home buyers qualify for a loan, but if the credit score and down payment requirements remain high, it won’t make much of a difference.
The qualifications for a loan have become tougher during the past year, but that is a result of what’s happening on the secondary market. BB&T sells most of its loans on the secondary market, mainly to the mortgage companies Fannie Mae and Freddie Mac.
It seems that Fannie Mae and Freddie Mac are in a competition to see who can have the tightest regulations.
The low rates can’t hurt, and may help buyers who were on the fence make the decision.
For the average consumer though, lower mortgage rates are unlikely to have much of an impact.
There was a small increase in business at Crescent Bank as a result of the lower rates, but the change isn’t likely to spur someone to buy who wasn’t already considering the purchase.
The rates are tied to the bond market and in the past 10 days the bond market has done well as investors have looked for a safe place for their money.
