by Laura Matiz
As anyone in the market for real estate knows, mortgage rates have been dropping, reaching their lowest levels in 16 months. The last time rates crossed the psychological barrier of 4% for fixed rates was in June 2013. These new low rates are likely to generate a lot of activity in the refinancing market, with current owners looking to trim their monthly costs, especially if they missed the opportunity because unemployment or other factors disqualified them last time rates were this low.
For new buyers needing to finance their purchase, watching the rates board will become a sport as they try to lock in at the bottom of the market. These low rates might fuel new activity, especially with the Financial Times and others publications expecting rates to fall even further because of the skittish financial outlook, with global issues, such as the Ebola crisis, the new cold war with Russia, and the rise of ISIS in the middle east, taking hold.
For buyers looking ahead, it is worth noting that HSBC has announced the eye-catching 0.99% mortgage, a record low for their variable rate product. Unfortunately, this rate is currently only available in the UK, but may hint at future products in the USA.
Some obstacles remain for buyers as banks make it challenging to receive credit. A recent story about the ex-Federal Reserve chief, Ben Bernanke, getting turned down for a mortgage exemplifies the problem. Pundits have expressed concerns about banks changing to investment houses — in order to optimize earnings — as one reason for the tight credit. Fortunately, as big banks move away from consumer lending, other companies have stepped in to offer credit when banks loans are not available. This means that buyers are having to apply to multiple banks and possibly to non-traditional lenders, which means now more than ever, you need a trusted team to guide you through the real estate purchase starting with steps to get your credit and loan pre-approved.
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