Over the past week we have seen some positive results in terms of mortgage applications and even refinancing that is taking place in the housing market, which is something that many officials feel needs to continue if inventory in the housing market is to be filled as these homes, along with foreclosures, are arguably dragging down home prices. Yet, questions remain over why there are not enough homebuyers to absorb this inventory, especially when rates on home loans are incredibly low and home prices are also quite affordable in some areas. Interest rates on home loans have hit record lows but this has not led some buyers to enter the housing market simply because there is still a great deal of uncertainty as to what may become of home prices, and there are also some worries by potential homebuyers that they do not have security in their jobs to make a major decision like purchasing a home.
Furthermore, there are some forecasts that home prices may not recover for another 9 to 10 years, which has also led to questions of if home prices will fall further before improving. Obviously, a potential homebuyer may not be attracted by low mortgage rates that are currently available if they feel their home’s value may decrease after they have purchased their home and early into their homeownership they find themselves in an underwater mortgage situation.
While the topic of negative equity has been discussed at great length over the past months, more affordability and opportunities to take advantage of low interest rates for underwater homeowners is still a crucial issue for some as homeowners who can pay their mortgage are still looking for affordability even when they have found themselves in a situation where their home’s value has dropped below what they owe on their mortgage. Currently, there are refinancing options available for underwater homeowners but they are not inclusive enough to help all homeowners facing negative equity but also in the position where they won’t qualify for the opportunity to refinance to a lower rate.
Again, we have seen some increases in the number of home applications and refinancing activity at various points throughout the past months but this is by no means enough to solve the problem of excessive inventory of foreclosed homes nor are there enough solutions to help prevent foreclosures that may be on the horizon. However, there is hope that new ideas or proposals will soon be submitted or come into effect so that not only will buying a home be more attractive to potential homeowners at the current time but current homeowners may also be able to take advantage of these record low rates that may make paying on an underwater home loan, as an example, more affordable.