Both Foreclosure Numbers and Loan Demand for Purchasing Homes Increase
While foreclosures are increasing so too is a demand for home loans. The mortgage rates have touched a record low and this has led to the demand for mortgage loans. On the other hand foreclosures are surging.
The Treasury reported that only 12% of those borrowers eligible for loan modification as per the Obama government’s rescue plan has had their loans modified.
Despite the dichotomy of increasing foreclosures being matched by an equal increase in demand for loans, the Federal Reserve said that the general health of the economy was improving. The housing sector and the employment scene continued to be pale. Timothy Geithner the Treasury Secretary said that the economy had started to go forward again.
In the last few months the housing sector has been showing signs of stability. Sales have increased following the sharp fall in prices. In some areas however the prices are beginning to move upwards. But increased foreclosure numbers could well lead to another drop in prices and spin off the sector into another vicious cycle.
According to the Treasury 360,165 borrowers have got their mortgage commitments reduced in August. In July the number had been 235,247. The officials of the Treasury admitted that considerably more would have to be done to mitigate the impact of the most intense and persisting crisis in the housing sector.
The fall out on society has been disastrous. Families and have been ruined. Michael Barr the assistant secretary of the Treasury financial institutions said, “The recent crisis in the housing sector has devastated families and communities across the country and is at the center of our financial crisis and economic downturn.” He was speaking to representatives of financial services sub-committee.
According to the survey of the Federal Reserve’s Beige Book the housing crisis has been slowly easing. There has been some improvement in the worst hit regions.
Applications for mortgages surged ahead in the last week of August since the last week of May. Consumers are seeking to take advantage of the record low interest rates as per the findings of Mortgage Bankers Association. MBA found that the rates of 30 year fixed rate mortgage loans was the lowest since the last 3 months. This has led to an increase in demand for refinancing. The applications to purchase houses also increased – the numbers being the highest since the beginning of this year. Many factors have been at play – low interest, low prices of affordable houses and government tax credit offers.
