Mortgage trends – Trends of home loan for the year 2011

Market watchers and financial experts have predicted some trends in the housing market for 2011. The housing market has been suffering since the recession of 2007-2009. In 2010, the mortgage rates had lowered historically. But as the economy has started to stabilize, the housing market is experiencing a boost too. As a result, the mortgage rates too have started to increase. So, if you need a mortgage for your home, or if you want to refinance, you should first ask the question “how much mortgage can I afford“. It is essential for you to first find out your affordability before taking out a home loan.

 

Mortgage market trends for 2011

 

The 5 mortgage trends for 2011 as predicted by the financial experts are:

 

1. Mortgage rates will be rising – The mortgage rates are expected to rise throughout the year in 2011. The MBA or the Mortgage Bankers Association said that the mortgage rates may hover around 5% in 2011 and may increase to about 6% by 2012. The mortgage rates had lowered considerably in the second quarter of 2010, but it had started to rise from the last quarter of 2010. However, though the mortgage rates will hover around 5% in 2011, it is said that the rates are still in the low range.

 

2. Demand for mortgages may decrease – The overall demand for mortgages may decrease in 2011. The consumers have lost their confidence due to the financial depression and it may take time for them to gain back their confidence.

 

3. Mortgage refinancing applications can drop – The mortgage refinancing applications will drop this year. MBA has said that the refinance applications may fall by around 40% in 2011 and then the percentage may even rise in 2012. The rising mortgage rate is one of the most important reasons for the predicted lowering of the refinance applications. The other reason for the predicted drop in the refinance applications is the pause that was put on the foreclosure process in 2010 due to the problems in the foreclosure paperwork.

 

4. Mortgage processing will remain slow – The mortgage processing is also going to remain slow in 2011. Most of the lenders anticipate that it will take almost 60 days between the loan application and the closing. Even most of the lenders say that they want the period of loan processing to continue over a period of 60, 75 or 90 days.

 

5. Qualifying for a mortgage will be tougher – Another very important trend to be seen in the mortgage market is that people may find it hard to qualify for home loans. With the introduction of the new mortgage lending laws in 2010, lenders have become stricter towards the borrower’s credit and ability to repay the home loan.

 

Other than this, zero cost refinancing may grow all the more and the jumbo loan mortgages are going to get more attractive. Experts say that the rates for these loans were high, especially in the last two years. However, the jumbo loan lending institutions are going to lower the rates in 2011 in order to woo more people into borrowing the jumbo loans. 

 

Samantha Taylor  is the Community Mentor of MortgageFit and has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry. Few of her popular articles would include names like ‘Mortgage that you can afford’, ‘Mobile Home Loan with Bad Credit’, and How much mortgage can I borrow?’

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