What if they cut mortgage rates to record lows — but no one could take advantage of them?
According to mortgage finance company Freddie Mac, the average 30-year mortgage rate hit 3.94 percent this week for 30-year loans, below the previous recorded low of 4.08 percent in the early 1950s, as reported by the National Bureau for Economic Research.
Mortgage brokers like Debbie Siegel of Westchester Mortgage in Newton Centre, Massachusetts say they are seeing a lot of disappointed people learning they can’t qualify for a refinance or a new mortgage at these rock-bottom rates.
Despite the plummeting rates, the Mortgage Bankers Association reported this week that mortgage applications actually dropped 4.2 percent from the previous week, and refinances 5.3 percent, as their overall purchase index is down 12 percent from a year ago.
Some of the hurdles and reasons people aren’t getting mortgages or refinancing deals are that lending standards have tightened dramatically, especially compared to the wild and crazy, fast and loose days of the mid-2000s as the real-estate and credit bubbles were swelling to a disastrous burst.
Now, lenders are demanding more money down on a mortgage, in some cases as much as 20 percent on a purchase.
But some call the gloomy reports about refinancing and mortgages overdone, like John McGeough, of Lamacchia Realty Inc. in Waltham, Mass. west of Boston, which sells homes and condos as far out as Worcester County, southern New Hampshire, and Cape Cod.
“People should be gobbling up properties at a feverish pace right now, but they’re not,” McGeough said, adding that he’s finding many buyers who think they won’t get a mortgage can, sometimes with 10 percent down, sometimes with a credit score only in the mid-600s. “Right now is by far the best time to buy that we’ve ever experienced. We’re hoping that as the rates continue to stay at this rate, and some of the hype” about impossible-to-get mortgages wanes, “we’re going to actually see a very healthy market.”
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