Nationwide mortgage rates are creeping up despite dismal sales and demand. Interest rates on major mortgage products have been rising steadily for the past few months, though the rates are still near record lows. The real estate industry is still embroiled in a quagmire involving foreclosures, and demand is nearing an all time low.
Cheap housing cannot stimulate much demand
Even some of the cheapest real estate on record cannot seem to boost sales. Recent housing data revealed new home sales and existing home sales fell during February. Interest rates on mortgage rates are climbing since hitting near-record lows in the fall of 2010, according to USA Today. The nationwide average rate on 30-year, fixed-rate mortgages reached 4.81 percent on Thursday, March 24, an increase of 0.05 percent in a week. The average 15-year, fixed mortgage hit 4.04 percent. In November of 2010, the 30-year fixed was at 4.17 percent, and the 15-year fixed reached 3.97 percent, the lowest rates in decades.
Legal quagmire still ongoing concerning foreclosures
The legal dilemma regarding possibly fraudulent foreclosures initiated by rubber stamped paperwork, or “robo-signing,” is still far from a resolution. Major mortgage lenders practically handed out same day loans, rushing foreclosure paperwork without doing the due diligence. A major investigation was launched into the matter that involves all 50 state attorneys general and various federal agencies. Banks and mortgage lenders involved in the scandal are still struggling to secure a settlement with the states and the federal government, and some government agencies are looking to create their own settlement to bypass the process, according to Reuters.
Lousy outlook for real estate
Once the matter is settled, a flood of foreclosures will begin; thousands of pending foreclosures have been stalled because of the crisis. Evicting thousands of people will likely boost the payday loans industry as former homeowners scramble for cash to cover moving expenses. The foreclosure crisis is expected to cost the banking industry tens of billions, according to Fortune, regardless of any government settlements or fines. Anyone who can get access to the credit to purchase a home will benefit from doing so sooner rather than later. Demand and sales are very low, and fewer new homes are being built. The foreclosure mess has only made things worse, and the housing industry isn’t going to recover until prospective buyers are able to purchase homes again.