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Why Can Mortgage Rates Rise in a Down Market?
from: Mortage & Debt FactsWith all the hoopla about the overload of inventory in most states (due to foreclosures), and the dropping of interest rates by the Federal Reserve, you may be wondering why mortgage rates haven risen in the past year over all.
The mortgage industry is not the same as the banking and the housing industry. They are connected to these two sectors of the market, but lending products are usually priced on their own merits and not just those of the economy.
The Lender’s Point of View
While the amount of inventory can affect home prices and spur competition amongst lenders, it can lower the rates if one lender is trying to grab a bit more business. On the other hand, the mortgage crisis has been so severe in some states that many lenders are wary of lending to unreliable borrowers. They have tightened their credit requirements and when you don’t meet those newer requirements, they may raise the rate to hedge their risk.
So, even with a market rate of 6.00% on a 30-year fixed rate mortgage, you could still end up paying more if you don’t meet the new credit requirements of a FICO score of 720 or more, solid employment, and a sizable down payment.
The Market’s Point of View
Mortgage rates can also increase, even if the Federal Reserve decides to lower interest rates. This may spur banks to lend out more money and attract more customers.
As the new customers start to flood the market, the demand increases. When the demand of any product goes up, so does the price. That’s why the mortgage rates can even increase when the Federal Reserve cuts rates.
Your Point of View
It is very difficult to time to buy a house at the bottom of mortgage rate drop cycles. Typically, you can do this better if you are refinancing than if you are buying because you are then comparing your new loan to whatever you had before. If it saves you money or drops by at least 1 to 2 points of your mortgage interest, then you are pretty confident that buying at that time is a good move.
Otherwise, if you are new buyer and have nothing to compare it to, you still can be relatively comforted by the fact that despite rises and falls over the short-term, mortgage rates are at a historically low-point for now in comparison to years past.
They may not drop more than 1 point more and should they do so, you can always refinance your mortgage rates later.
Illinois Mortgage Specific links
Illinois Mortgage News
FDIC sues big banks over mortgage debt losses - Chicago Tribune
 Latin American Herald Tribune | FDIC sues big banks over mortgage debt losses Chicago Tribune (Reuters) - The US government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009. Acting as receiver for Citizens National Bank and Strategic Capital ... FDIC sues big banks over mortgage securities |
Single mother caught in mortgage nightmare - KMOV.com
Single mother caught in mortgage nightmare KMOV.com by Craig Cheatham / News 4 Investigates MADISON COUNTY, Illinois (News 4 Investigates) -- A Madison County woman is in a mortgage nightmare. She's fighting to stay in her home and raise her handicapped daughter while a massive bank pushes to foreclose ... |
Ill. county sues mortgage lenders, claiming fraud - CBS News
 Madison County Record | Ill. county sues mortgage lenders, claiming fraud CBS News BELLEVILLE, Ill. — An Illinois prosecutor is suing 22 local and national banks and mortgage companies, accusing them of deceit and fraud in using an electronic mortgage registry to sidestep recording fees his county should have been collecting. County sues mortgage lenders, alleging deception St. Clair County sues big bank mortgage lenders, alleging deception |
FDIC sues big banks over toxic mortgage securities bought by 2 failed Illinois ... - Washington Post
 Bakersfield Now | FDIC sues big banks over toxic mortgage securities bought by 2 failed Illinois ... Washington Post WASHINGTON — The government has sued several big banks over toxic mortgage securities they issued that were bought by two small Illinois banks which failed in May 2009. The Federal Deposit Insurance Corp., which seized the two banks when they failed, ... FDIC Sues Bank Of America, JPMorgan, Others Over Toxic Mortgage Bonds That ... FDIC sues big banks over mortgage debt losses FDIC Sues on Mortgage-Backed Securities Sold to Banks |
Home Sales in Illinois See 15.7 Percent Year-Over-Year Rise in April - National Mortgage Professional Magazine
 Globe and Mail | Home Sales in Illinois See 15.7 Percent Year-Over-Year Rise in April National Mortgage Professional Magazine Illinois home sales had their strongest showing in two years and statewide median prices remained steady for the second straight month, April data released by the Illinois Association of Realtors (IAR) show. Statewide home sales (including ... April home sales in Illinois up 15.7% from a year ago; median prices stable ... Local home sales jump, prices show stability April Home Sales Soar, Prices Stabilize |