Mortgage Trends in 2011

Mortgage Trends in 2011-Image via Wikipedia

Most real estate experts are of the opinion that one must take out a home loan or apply for a mortgage refinance loan when it is the perfect time for their individual needs. While the risk takers and the experienced people wait to beat the market trends, someone who is taking out a mortgage loan for the first time must think of his personal monetary needs before taking out a home mortgage loan. Reports suggest that most prospective homebuyers choose to observe the general mortgage trends before applying for a loan as they think that a mortgage rate prediction is pretty impossible for the borrowers. Have a look at some mortgage trends that you can expect in 2011.

There will be a slow rise in the interest rates on various types of mortgage loans.

According to the Mortgage Bankers Association (MBA), the mortgage rates will slightly rise in 2011. The rates may hover around 5% in 2011 and may gradually rise to 6% in the year 2012. Economists had already expected a rise in the mortgage rates in the last quarter of 2010 and at the end of 2010; mortgage rates began to increase from the 4% range to 5%.

Overall demand for the mortgage loans will remain less throughout 2011.

As the home mortgage loan rates will go through a hike in the year 2011, there will be a fall in the demand of mortgage loans. The Mortgage Bankers Association (MBA) foretells that the total number of mortgage originations will decrease and fall below $1 trillion. The main reason of this change is the passive financial growth and double digit unemployment rate.

A drop in the number of loan refinancing applications.

Refinance mortgage loans have already represented a major portion of the mortgage applications and with the rising mortgage rates in the US housing market, there may also be a drop in the number of refinancing applications. Around 80% of the mortgage applications in the US are done by those homeowners who take out mortgage loans for refinancing. Refinancing activities may drop below 45% of mortgages that will be taken out in 2011 and further drop to 26% in 2012.

The jumbo loan mortgage loans will become more attractive throughout 2011.

In 2009 and 2010, interest rates for jumbo loans were higher as compared to the rates for the normal loans. The high rates on the jumbo loans kept the homeowners from refinancing their loans. However, in the last quarter of 2010, the interest rates on the jumbo loans dropped, thereby spurring refinancing applications.

Thus, if you’re in the market for getting your home mortgage loan, you must take into account the mortgage trends mentioned above. Help yourself take a better and informed decision so that you can get the best loan according to your budget and affordability. Get more information about mortgages here

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