Categorized | Finance and Mortgage

Adjustable-Rate Mortgages Hit New Low

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Both adjustable-rate and fixed-rate mortgages once again dropped slightly in the most recent report. Adjustable-rate mortgages hit new record lows, coming in at 2.91 percent for a five-year hybrid adjustable-rate mortgage loan. Thirty-year fixed-rate mortgage loans dropped to 3.98 percent. That marks the fourth straight week during which the loan rate is at or below four percent.

As a result of the decreases, home affordability across the United States has improved by more than one percent. With that said, however, contract cancellations also saw an increase. The cancellations put a damper on any chance for a strong rebound in residential real estate sales.

Despite adjustable-rate mortgages hitting new record lows, many of those buying new homes, or looking to refinance are instead opting for fixed-rate mortgages. Many believe adjustable-rate mortgages were partially to blame for the housing market collapse a few years ago.

With fixed-rate mortgage loans hovering under four percent, one would think that the residential real estate market would be expected to experience strong increases in the coming months. However, analysts are not optimistic of anything but a minimal rebound for quite some time.

Banks have counteracted against the low mortgage rates by making it very difficult to secure any kind of mortgage loan. Most now require a significant down payment that is simply not affordable for most first-time homebuyers. In addition, many potential homebuyers are staying away from the housing market despite the low rates due to job market uncertainty. Many are afraid to commit to a mortgage because they do not know for sure if they will have to relocate in search of a new job.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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