Mortgage Market News: Mortgage Interest Rates and DAPs
Mortgage market news is seeing some movement today. The biggest news is that mortgage interest rates are falling dramatically. The government move to takeover Fannie and Freddie is injecting some confidence in the mortgage market, so interest rates are falling. On this news, mortgage applications are on the rise. More buyers are trying to get in on the cheaper loan rates. Unfortunately, as CNN Money reports, lower mortgage interest rates do not mean more loans:
Since last Friday, the 30-year fixed rate has dropped to 5.79% from 6.26%. But only buyers with a credit score of 740 of above - and a 20% down payment - can qualify for such a low rate. During the boom, borrowers only needed scores of 640 to land the lowest rates available. Even a 580 score would get them very close to the best rate.
That’s right. One of the big problems holding many buyers back right now includes qualification issues. Across the street, a home for sale has received to offers, but both have fallen through due to credit and down payment issues. So, even though mortgage interest rates are lower and mortgage applications are up, it may not translate into more home sales.
Down payment assistance programs (DAPs) may get new life
On Monday, I reported that the FHA loan program is about to get a couple of new rules, including one that closes the loophole allowing borrowers to use down payment assistance programs (DAPs). Despite their dubious nature in the eyes of the FHA and the IRS, some in Congress are trying to extend the due date to keep DAPs in place.
SO, it may be that this “tool” may not be suspended come Oct. 1. I’m not sure how that helps, since 40 percent of foreclosures in the FHA loan program since last October have come from loans that used DAPs. It seems as though allowing this practice to continue will do little beyond perpetuate the problem.
Tags: mortgage market, mortgage market news, home mortgage loan, mortgage interest rates,
DAPs, down payment assistance, mortgage loan blog
