Recent Drop in Mortgage Rates

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Just some months ago, people were worried about the increasing rates of home mortgages. Things were going in favor of home mortgage lenders. However, now things are going backward and against these home mortgage lenders. In May, the rates on long-term mortgage were dropped constantly for 6 straight weeks.

According to some sources, average mortgage rate on 30 year FRM was slightly decreased from 4.61% to 4.60% during the last week of May which is the lowest figure since last December. One year prior to this, the average rate of mortgage interest was 4.84%. The average interest rate on 15 year FRM was decreased by 0.02% from the figure of 3.80% which was 4.21% last year.

As the ARM is concerned, its average rate was decrease from 3.15% to 3.11%. The average rate on ARM was 3.95% last year.

While the rates were going down for these mortgage loans, the application for the mortgage loan went up by 1.1% according to some home mortgage lenders. On the other hand, those who have borrowed mortgage loans decided to refinance them so they can take full advantage of this opportunity. For this reason, the percentage of refinancing activities on mortgages was increased from 66.7% to 66.8% recently. While the application for home purchasing was increased by 1.5%.

As if it was not enough, the rates on mortgages fell again on the last day of May. This created the lowest average rates on mortgage which has never been seen before. This record breaking fall in average rates was a serious blow to many home mortgage lenders. For some cities it was the lowest figure in last eight years, while for others it was lowest since the year 2000. Some experts have even said that this slump is worse than it was in great depression era.

This double fall in average rates has also increase the percentage of foreclosures recently. Experts have said that this percentage will continue to increase as there are chances of more falls in average rates in future. It has also been seen that many home buyers are now going for rent houses because of the persistent decrease in value. They are concerned that doing investment on something which is decreasing in value will bring a loss to them. Not only them, but many home mortgage lenders are also worried about the future of home mortgage system.

Some reports have stated that even some major metropolitan cities of US have been hit by this slump, except Washington. All of these cities are now experiencing rise in foreclosures and refinance. This slump has been a heaviest blow to all the home mortgage lenders around the US.

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