Friday, February 2, 2007

Mortgage rates move higher

Following recent financial reports indicating steady economy growth, the rates on 30-year fixed mortgages rose to 6.34%, the highest level since October 2006. Freddie Mac reported that the rates on other types of mortgages also increased, the 15-year fixed-rate mortgage reaching 6.06% and the one-year ARMs 5.54%.

The 30-year fixed rate is nearing the October 2006 levels, when it was at 6.40% in the week ending Oct. 26th. The rise occurs after reports of steady financial growth were issued earlier this week. The economic results of the last quarter of 2006 were better than expected and economists hope this will influence the housing market which is slowly beginning to stabilize.

Surprisingly, delinquencies are becoming more frequent in spite of a relatively strong economy. Mortgage companies are beginning to take measures to prevent serious problems. They’re warning their customers of upcoming rate adjustments and calling borrowers within days after a missed payment. Banks provide information and assistance in dealing with mortgage payments and even allow some borrowers to refinance their ARMs into a different loan at no cost. According to Mark Zandi, chief economist at Moody’s, the increased levels of delinquencies may be due to a weaker housing market and the widespread use of adjustable-rate mortgages, which are now beginning to adjust.

To avoid foreclosure costs, banks allow their clients to sell their properties for less than the due amount and forgive the remaining debt. This method is called a short sale, and helps borrowers avoid having a foreclosure on their credit reports.

A group of major lenders are planning a national advertising campaign, beginning this spring, which shall promote a toll-free number (888-995-HOPE) for mortgage and homeownership counseling.

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