Rates on Mortgage Loans Decline Again

The interest rates on US fixed mortgage loans decreased once again to its lowest ever. As a result, potential buyers have more motivation to face the housing market.

According to Freddie Mac, a mortgage buyer, the average interest rate on the 30-year mortgage loan declined to 3.56 percent, which is down from 3.62 percent in the previous week and the lowest ever since the 1950s, when long-term mortgages started.

Moreover, the average interest rate on the 15-year mortgage decreased to 2.86 percent, which was down from 2.89 percent in the previous week.

One of the reasons for the moderate housing recovery this 2012 is the inexpensive mortgages. In fact, home sales increased for the month May compared to the same period in the previous year.

The low interest rates for mortgages could offer assistance to the economy as well, if a larger number of people refinance. People who refinance at lower rates will be charged with a lower interest on their loans, thereby having more money to consume and save. A lot of homeowners allocate their savings on renovation, furniture, appliances and other developments, which causes the economy to grow further.

However, the rate of home sales is still under strong levels because there are still a lot of people who find it hard to be eligible for a mortgage loan or do not have enough money to pay a large amount for deposit as demanded by banks.

In addition, the weak job market could also discourage some people from buying homes. According to a report from the government in the previous week, only 80,000 jobs were added by US employers during the month of June, causing the unemployment rate of 8.2 percent to remain the same. This slow job creation leads to less spending of consumers.

There has been a decline in the mortgage rates since they tend to trace the yield on the 10-year Treasury note. Because of the weaker US economy and uncertainty concerning how the Europe debt crisis can be solved, investors buy Treasury securities, which are deemed as harmless investments. When there is a greater demand for Treasury securities, there is a corresponding decrease in the yield.

Borrowers With Poor Scores Get Auto Loans

For the first quarter of the year, Experian Automotive released a report about the status of automotive financing. This is good news especially for those who want to buy a new car.

According to the report, more buyers with lower scores are getting approved for auto loans. In financing a new car, the average credit score decreased six points to 760. In contrast, in financing a used car, average credit score decreased four points to 659.

Moreover, more loans are being offered by lenders. Loans to car buyers with nonprime to deep subprime credit score were up by 11.4 percent.

In addition, buyers are taking on loans of larger amounts. For a new car, average loan amount increased to $25,995, more or less $589 more than last year. However, for a used car, the average loan amount increased by $411 to $17,050.

Finally, lower monthly payments are being offered by lenders. According to Melinda Zabritski, director of automotive credit at Experian Automotive, monthly payments can be less expensive due to longer loan terms and lower interest rates. Average interest rate for new cars is 4.56 percent and 9.02 percent for used cars.

Experts said that all these good news were because there has been an increase in consumers paying back their loans. The reports adds that the number of loan payments that were overdue for 30 days declined by 7.6 percent and those that were overdue for 60 days declined by 12.1 percent. Also, there was a decline in vehicle repossession by 37.1 percent.

Zabritski added that lenders are able to offer more loans and charge lower interest rates because there are lower losses. However, more loans and lower interest rates will not guarantee borrowers approval for auto loans.

Whether you want a brand new car or a used one, experts advise taking into consideration the reliability of the car, the cost of financing and your ability to repay the loan.

Older People Still Have Student Loan Debts

Student loan debt has become a huge problem not only for fresh college graduates but also for the United States. According to a recent report from Barclays, more or less one out of six people with an age of above 50 years old have a student loan debt.

In addition, the report stated that the outstanding student loans in the United States reached more than $1 trillion already. 15.5 percent were made up of Americans with age 50 years and above, and 4.2 percent comprised of Americans with age 60 years and above.

In terms of delinquencies, 17 percent of overdue student loan balances were made up of Americans with age between 50 and 59, and just about 5 percent comprised of those with age 60 years and above.

Furthermore, Barclays reported that between the years 2007 and 2009, student loan debt in retired households went up by 62 percent. There are a variety of causes for this said increase. Although some people are more likely still paying back their student debts for their college education, there are some older people who took on loans in order to go to school once again.

Another cause why post 50s are suffering from debt might be from co-signing loans for their children and grandchildren. Based on a recent study conducted by Ameriprise Financial, 71 percent of parents with age above 50 years old have assisted their children finance their college education.

Debtors who are in their older years and still have outstanding federal student loans might be surprised when they start withdrawing Social Security, because the government can increase those payments to use it those loans.

For the moment, student loans cannot be discharged in bankruptcy except if too much hardship is declared by the borrower. In the year 2008, only 29 of the 72,000 borrowers in bankruptcy were approved for the exemption.

Why is it Hard to Refinance a Mortgage?

Years ago, when the loaning business was not in the crisis it is in today, one thing is always for certain. When the interest rates would drop, the homeowners would refinance their mortgages to be able to take advantage of the lower rates. This would help them save about a hundred bucks in their monthly bills.

However, things do not work that simple anymore. Mortgages rates have been at their lowest now. The average mortgage loan is a 30 year loan at 3.56% rate this is almost 1 percent lower than it used to be last year.As the rates have decreased, the number of refinancing applicants has also fallen for the third time this week.

According to CNBC, the unusual trend is not new, and it may mirror the new reality of housing in the coming years. But there is definitely something you should worry about further about a mortgage than just its rate. If the value of a property has fallen, then it can lead to being declined for a refinanced loan. The government has stretched out the authority of Fannie Mae and Fannie Mac so that they could refinance loans in the Home Affordable Refinance Program. This will allow them to make refinancing transactions to happen by getting rid of constraints on the unequal position of the current market.

Banks are still being cautious with their transactions in mortgages. The Bank of America, JPMorgan Chase, Citigroup and the Wells Fargo are currently revolving around the $25 billion settlement money they have with the state authorities and federal officials. They are trying to avoid being stuck on the same situation in the foreclosure-abuse they had last year. The most civil thing to do is for them to demand higher loans.

So, if you have the opportunity to refinance your loan, do not hesitate to take the opportunity to talk to your lender about it. For it may be able to help you in reducing your liabilities in the mortgage loan in the future.

Payday Loan Trap

The number of payday loan stores in Missouri is extremely high and it raises concern from some citizens. The increase in the business had been parallel to the increase of the poor and middle class citizens in the area. Sadly, these people are starting to approach their credit card limits and they have no available funds for crisis.

The payday loan stores in Missouri would provide their customers $100 to $1,000 worth of loans in a week or up to a month. These loans do not require anything more than an applicant’s proof of employment and a postdated check from the applicant.

According to the Federal Reserve Bank of New York, 76 percent of the business’s transactions often come from the same customers. This means that the people who avail of these loans are in an inescapable circular cycle of debt. The interest rates in the area is maximized at 1,980 percent however people will still find it difficult to pay off the loans no matter how much they try to.

The industry would victimize and take advantage of the destitute families in Missouri. The local authorities have been trying to control the situation for so long. However, with the problem getting so much out of hand it seems that it is about time that new legislative laws dealing with payday loans must be drafted and imposed in the area.

However, no businesses would be interested to invest in Missouri if the cap goes any lower than 1,980 percent. According to analysis, a reduction of 36 percent in the cap would allow businesses to run without further damaging the financial status of the citizens.

On the other hand, those who oppose the interest cap claim that it would destroy the industry. Most of the support is given to the decrease of the cap. Everything would just depend on the final ballots that would be casted on November.