7 Mortgage Trends To Expect In 2011 | Irvine Real Estate | Irvine Homes for Sale

by Robert Mack on December 29, 2010

in Buyers, Latest News, Sellers

Financial experts suggest that borrowers should apply for a new mortgage loan, or refinance their home loan when the time is right for their individual needs, rather than attempt to time the market. While risk takers may be enthusiastic about waiting until the last minute to lock in a low mortgage interest rate, most homeowners and homebuyers prefer to observe general mortgage market trends and focus more intently on their own finances. (If you can’t qualify for or don’t want a traditional mortgage, one of these options might be right for you. See 4 Alternatives To A Traditional Mortgage.)

IN PICTURES: 5 Steps To Attaining A Mortgage

Predicting a specific mortgage rate for a particular time is pretty nearly impossible, but real estate market observers have identified a few trends that they anticipate will impact the mortgage market in 2011:

  1. Mortgage rates will slowly rise throughout the year.
    The Mortgage Bankers Association (MBA) anticipates that rates will rise slightly in 2011, hovering around 5% and increasing to about 6% in 2012. Holden Lewis of Bankrate wrote earlier this fall that economists had predicted a rise in mortgage rates by the third quarter of 2010. At the end of 2010, mortgage rates began to climb out of the 4% range and slightly above 5%. While any increase in mortgage rates is unwelcome to homeowners who want to refinance or to buyers, a 5% mortgage rate is still historically in the low range of interest rates.
  2. Overall demand for mortgages will decrease.
    The MBA predicts that total mortgage originations for 2011 will decline to less than $1 trillion, driven by subdued economic growth and a lack of consumer confidence.
  3. Mortgage refinancing applications will drop.
    Mortgage refinancing has represented a large portion of all mortgage applications in any given week this year, with the refinancing applications accounting for about 80% of all mortgages written this year. The MBA predicts that refinancing activity will drop below 40% of mortgages in 2011 and decline further to 26% of mortgages in 2012. Not only will rising mortgage rates reduce the demand for refinancing, but the pool of qualified homeowners will shrink. Homeowners who could qualify are likely to have done so in 2010, and others have difficulty obtaining a loan approval because of reduced equity or credit or income challenges.

I like this article because it talks about individual buyers or home owners looking to refinance and it states that rather than timing the market, they should take action when it is right for them….

Posted on Irvine Orange County Real Estate Market News

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