Categorized | Finance and Mortgage

Mortgage Rates Will Remain Low Throughout 2012

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Analysts are predicting that the low mortgage rates that essentially defined the real estate market in the second half of 2011 will likely continue through 2012. The Federal Reserve had previously guaranteed that they would keep the rates artificially low until 2013, though their assistance may not even be needed.

Many experts believe that home prices will continue to be low due to another glut of foreclosures hitting the market throughout the next twelve months. In addition, unemployment rates are expected to remain high for much of the year, thus keeping many potential buyers away from the market. With the residential real estate market expected to experience declines in performance throughout the next year, mortgage loan interest rates will have to remain low so as to attract buyers to enter the property market.

Although 2011 was marked by the lowest mortgage loan rates ever, there was a sharp decline in the amount of money lent for residential property purchases. In fact, the total dollar figure dropped nearly a half trillion dollars from last year, and is almost sixty percent less than where it was during the residential real estate peak years.

While the record low mortgage loan rates seen in 2011 did little to spur home purchases, they did produce an all-time high of refinancings. With a new HARP program in the wings, the number of refinancing applications and approvals will continue to hit incredibly high levels.

Restrictive lending standards certainly played a role in keeping new home purchases down in 2011. Despite the record low mortgage loan rates, many potential homebuyers could not be approved due to stringent lending standards. Many real estate analysts believe that restrictions will have to be loosened for 2012 to be a better year.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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