The mortgage business is usually slow in the mortgage business; however, this time around, it is strangely quiet.
According to the Mortgage Bankers Association (MBA), for the week ending January 2, 2015, the total mortgage application volume decreased to 9.1% from 2 weeks earlier, on a seasonally adjusted basis. This reading included additional adjustments for Christmas and New Year (during the days when the banks were closed).
Refinancing application of existing mortgages has reduced by 12% from two weeks ago, says the MBA, while the mortgage applications to buy a new home decreased by 5%. Throughout 2014, December is the slowest month in the housing industry, which is attributed more on sales rather than just the winter chill.
MBA’s chief economist said, “Beyond the seasonal slowdown, purchase application volume remains about 8 percent below last year’s level, indicating that homebuyers are still cautious.”
Consumers are still cautious despite the decreasing mortgage interest rates. Today, the average contract interest rates for 30-year fixed rate mortgages decreased to 4.01% from 4.04%. Falling bond yields this week has reduced the interest rates even lower.
According to Mortgage News Daily (MND), the average rate on the 30 year fixed is now a full quarter point lower than the average rates during the last half of December.
Because of the falling interest rates on mortgage, it is probably the best time to acquire loans. Inquire with your local banks and lending institutions about the requirements for loan application now. On the other hand, if you think that your credit rating is a bit on the downside, you might want to try applying for a guarantor loans. Or, you may help a friend and be a guarantor yourself.
Tenant guarantor loans are granted to borrowers who pose great risks to the lending institution. Instead of disapproving the loan application, lenders usually require these high-risk borrowers to present a guarantor who will agree that they will repay the loan in the event that the primary borrower will default on it. It is important to note that guarantors should be someone who is liquid enough to ensure that they are capable of repayment. The most common guarantor is a parent that serves as a guarantor for a child’s mortgage.
Becoming a Guarantor
If someone asks you to be a guarantor of a loan, it is very important that you should first evaluate your relationship with them. Know whether he is likely to default on payments or not; to be sure, you can ask the borrower for the details of their current financial situation and how they plan to repay the loan. Then, discuss this situation with the mortgage broker so that he will be aware of the situation. Aside from that, you should also be aware of the details of the loan; the proposed loan contract, interest rates, as well as the amount of the installments. You may also ask the lender whether or not they are willing to set a time limit on your obligation as a guarantor. As soon as that is clear and as soon as you have agreed on the terms, sign the paper works; note that your name will not appear on the deeds.