2008 was not a good one for most homeowners in this country. Many who work in the real estate market are hopeful that 2009 will bring an upswing in their battered sector of the economy. They feel that potential home buyers will be encouraged to take on mortgage loans with the new low interest rates and help reduce the current glut of home inventory. Most financial analysts see it differently, however. They believe the recession is only beginning and that home prices will continue to decline in the coming year. Consumers in some markets might take the opportunity to grab the current low rates offered on mortgage loans. But the inventory surplus from foreclosed properties may continue to hold back the real estate market. Making matters worse are the mortgage loans at adjustable interest rates that will reset soon. Many predict that will contribute to the already overburdened inventory of homes. Some consumers who would like to buy right now are finding that they are not eligible for mortgage loans like they once were. Banks now have much more restrictive lending practices, resulting in less mortgage loans being awarded to applicants than there were prior to the credit crisis.
Many people who currently own properties would like to lock in the low rates and refinance their mortgage loans. Applications for mortgage loans hit the highest level in five years last week. Over 75 percent of those were to refinance current mortgages. But many of those applicants were not approved. According to a lender in Florida, a very small percentage of those who contacted him in the last couple weeks to refinance have actually been approved. Some homeowners that purchased in areas like South Florida that have experienced a decline in values are finding that they owe more on their mortgage loans than their homes are worth now. The more restrictive lending practices are leaving these mortgage loan holders out in the cold. Lenders are requiring a higher percentage of equity in the home, a high credit score and a low debt to income ratio. This reality is very different than that of a year or two ago, when lending practices for mortgage loans were looser.
A lot of financial analysts warned years ago that lax lending practices would lead to trouble. It was as if anyone was approved for mortgage loans, regardless of his credit history. Although the new lending standards may be compounding the already suffering real estate market, they will offer a necessary correction for a credit market that appeared to be out of control. Only time will tell if 2009 will grant the market enough time for the credit industry to correct, and free up enough money in mortgage loans to spur the housing market. Similar articles Home loans ... Home loan rates ... Mortgage calculator ... Home mortgage ... Mortgage rates ...

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