Mortgage Rates UP

Posted by kevin on November 26, 2016 under Foreclosure Blog | Be the First to Comment

Since the election, interest rates on residential mortgages are up by over 1/2 of 1 percent (0.005 or 50+ basis points, if my math is correct). As a result, refinancings are down significantly. Increased mortgage interest rates will make homes less affordable, so it is likely that home prices will not advance in 2017 like they have from 2012 to 2015.

A WSJ article indicates that since lenders are not going to be making as much money on re-fi’s, they are starting to push more risky adjustable rate mortgages and increasing loan to value ratios. Didn’t that lead to a meltdown in 2008?

At the same time, MHA or, more specifically, the HAMP mortgage modification program is phasing out as of 12-31-2016. With Trump being elected, it does not appear that this program will be renewed. Under HAMP I and HAMP II, interest rates can be reduced to 2%. What I have been seeing, however, is that servicers are trying to push my clients into so-called “proprietary modifications” which are not subject to MHA guidelines. With interest rates rising, the proprietaries are starting at 3% or more, usually, for 5 years, and then are being stepped up to over 5%.

At that rate, it would seem that many consumers will be priced out of mods.

There is still time to get a MHA/HAMP but time is running out