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Rising mortgage rates scare consumers

Delaware residents may have noticed the rise in interest rates, which is discouraging consumers from applying for mortgages. In fact, as the first week of October ended, there were 6 percent fewer mortgage applications around the country than the prior week, as reported by the Mortgage Bankers Association. The increased interest rates also affected the number of rate-sensitive home refinancing loan applications, which dropped 8 percent during the same week.

The jump in interest rates means that for a 30-year fixed-rate residential mortgage of $417,000 or less, consumers will have to pay 3.68 percent interest instead of 3.62 percent. In addition, points increased from 0.32 to .035 for 80 percent loan-to-value ratio loans. While mortgage applications were almost 30 percent higher than they were in 2015, it may be due to a delay in mortgage processing because of new mortgage rules introduced in October 2015.

The first week of October saw an increase from 10 percent to 10.9 percent in home mortgage applications through the Federal Housing Administration, which could indicate an increase in first-time home buyers. However, home prices are again rising, while the demand for housing is greater than the supply.

Purchasing a home can be a complicated process. Before closing, buyers and sellers may have to deal with issues involving mortgages, contingencies, home inspections, and title searches. Buyers and sellers might consider contacting real estate attorneys who could offer advice regarding the particular problem they are facing. The attorney could help resolve title defects, assist with the documentation and see the transaction through to its conclusion.

Source: CNBC, "Mortgage applications down 6% as rising rates take a toll", Diana Olick, Oct. 12, 2016

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