Mortgage Rates Linked To Lender And Tax Foreclosures

Mortgage Rates Linked To Lender And Tax Foreclosures

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Rates for fixed-rate 30-year mortgage loans have risen as the continued rise in lender and tax foreclosures and unemployment claims battered the gross domestic product (GDP), according to Freddie Mac. The average rate rose from 5.07 percent the previous week to 5.15 percent. In 2008, 30-year mortgages had an average rate of 6.03 percent.

George Mokrzan, lead economist at Ohios Huntington National Bank, said the federal debt is pushing the mortgage rates upward. He said the government needs to consider increasing debt issues to be able to fund government spending plans, including the Obama administration's program to prevent further lender and tax foreclosures.

Mokrzan said an increase in federal spending plans drives up interest rates. He also said a higher volume of Treasury securities would push up yields mortgage rates higher, decrease housing demand and reduce housing affordability.

Freddie Mac lead economist Fran Nothaft attributed the rise in mortgage rates to an increase in bond yields following a decline in GDP in the last quarter of 2008. The Commerce Department announced that GDP declined by 6.2 percent from the previous year, considered the worst GDP performance in 25 years.

As lender and tax foreclosures increased despite foreclosure prevention measures, unemployment claims increased to 670,000 during the week ended February 21. This figure, the highest number since October 1982, however decreased to 639,000 the following weeks, according to data from the Labor Department.

The housing market also continued to slow down, as it was flooded with lender and tax foreclosures. Sales of new homes in January decreased by 10.2 percent from the previous month while sales of existing homes declined by almost 8 percent. According to First American CoreLogic, over 8.3 million mortgage borrowers owed much more than the current value of their homes. This underwater situation is one of the major reasons for the continued increase in lender and tax foreclosures.

In January, average rates for fixed-rate 30-year mortgages fell to 4.96 percent, a record in Federal Reserve history. The Fed attributed the decline to its announcement of buying mortgage-backed securities worth $500 billion in an effort to encourage bank lending, spur home buying and help reduce housing inventory coming from lender and tax foreclosures.


Meanwhile, the average rates for adjustable-rate 5-year mortgages rose from 5.06 to 5.08. Adjustable-rate mortgages were previously cited by many analysts as a contributing factor to the rise in lender and tax foreclosures.

About the Author:
Joseph Smith has been educating buyers on the finer points of Tax Foreclosures purchase at BankForeclosuresSale.com for over five years. Click here to visit and read more advice on finding Foreclosure Homes.



Article Originally Published On: http://www.articlesnatch.com


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