It was recently reported by CNBC.com that the demand for home loans has increased after suffering a setback when the homebuyer tax credit expired. Many attribute this rise in mortgage applications to be directly related to low interest rates on home loans. Interest rates on home loans have been quite low over the past months and, as result, many homeowners have been able to obtain a low interest rate on a mortgage or have been able to refinance their home loan to a lower rate.
When the homebuyer tax credit was still available homebuyers were rushing into the housing market due to the fact that home prices and interest rates on home loans were quite low and, since the tax credit was being offered, many homeowners were able to either better afford the closing costs that come with buying a home or were able to recoup this money when they claimed the tax credit. However, since April 30, which was the deadline to be under contract on a home and still qualify for the tax credit, many homeowners stop applying for home loans.
While there are many who say that the housing market is far from where they would want it to be, the increase in home loan applications is something that may give hope to those who are keeping a close eye on the housing market. However, there are also analysts who believe that home sales will remain low in the coming months and will not fully rebound until unemployment is no longer such a widespread problem.
Rates on home loans remain low, but there are many who believe that until more jobs are provided and men and women gain a sturdier financial ground, the housing market and other areas of the economy will continue to suffer. It’s obvious that when homeowners and consumers alike do not have an income that allows them to sustain a certain lifestyle that is conducive with affording a home or purchasing goods and services, the economy will suffer.
However, it’s hoped that if mortgage rates are kept low, home loan applications will continue to rise as homebuyers who may be able to afford a home, but may be hesitant, will see that obtaining a home loan at the present time can be quite affordable and, as a result, these individuals will enter the housing market. While again, factors like unemployment weigh heavily on the housing market, this increase in mortgage applications is hoped to be a small step in the right direction for housing.