Rates on [tag]30-year mortgages[/tag] fell for a fifth consecutive week as sales of both existing and new homes in July declined, confirming a cooling housing market. The mortgage company Freddie Mac said yesterday that 30-year, [tag]fixed-rate mortgage[/tag]s fell to 6.48 percent this week, down from 6.52 percent last week. That was the lowest level for 30-year mortgages since they averaged 6.43 percent the week of April 6. Mortgages had risen since then, hitting a more than four-year high of 6.8 percent the week of July 20 before falling in the past five weeks. Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, averaged 6.18 percent this week, down from 6.2 percent last week.

Rates on five-year adjustable-rate mortgages declined to 6.14 percent this week from 6.18 percent last week. Meanwhile, the Milwaukeee Journal reports, homeowners are getting one more cash advance from their homes. They’re doing it with cash-out refi’s – home mortgages big enough not just to cover debt, but to deliver some immediate cash to the borrower. Cash-out refi’s this spring hit their highest market-share percentage in 16 years – 88 percent of all mortgages refinanced through Freddie Mac, the McLean, Va.-based firm said. (more…)

We are at the end of the [tag]credit boom[/tag] — certainly the six-year boom and maybe the 60-year boom. Has any society ever created so many ways for people to go into hock? In 2003 Americans had 1.46 billion credit cards, or five per person. Home mortgages total $9 trillion, and some initially don’t require borrowers to repay all their annual interest. In 1946 households had 22 cents of debt for each dollar of [tag]disposable income[/tag]. Now they have $1.26. Behind these numbers lies a profound social upheaval: the “[tag]democratization[/tag]” of debt. Everyone gets to borrow. But this process may have reached its limits.

The origins of today’s credit culture date to the 1920s and the advent of installment lending for cars and appliances (stoves, refrigerators, radios), says economist Martha Olney, author of “[tag]Buy Now, Pay Later[/tag].” Attitudes changed. In the 19th century, “it was thought that only irresponsible families bought on credit,” she says. “By the 1920s, it was only foolish families that didn’t buy on credit and use it while they were paying for it.” In the mid-1920s, 60 to 70 percent of cars were sold on one- to two-year loans. (more…)

Many first-time buyers take it for granted that their parents will help them get on to the property ladder, a study revealed today.Some 23% of those looking to buy their [tag]first home[/tag] expect their parents to give or lend them the money for a deposit, according to mortgage lender Abbey. And 12% anticipate their parents will act as [tag]guarantor[/tag] on their [tag]mortgage[/tag], with 13% looking for help with buying furniture or white goods.

Rising prices remain a concern, with a quarter saying they would abandon their plans to buy if property values continued to shoot up. The research also revealed that 40% of first-time buyers will live with their parents to save money for their new home. One in 10 will stay at home for between one and two years, with a further 9% taking root for more than two years. In return, a quarter of these buying their first home say they will help their parents out round the house in years to come, and 18% claim they will pay back the money loaned to them. (more…)

“Two months ago I lost my job; I have since been late on my [tag]credit card[/tag]s; most of them are maxed out; and I am two months late on my [tag]mortgage payment[/tag]s. I had a chance to [tag]refinance[/tag] early on, but the rates were very high so I turned them down; now I can’t refinance at any rate. A friend of mine has offered to lend me the $30,000 I need on a second mortgage at 15 percent, plus I must pay all the fees, and I must repay him in full after three months. To repay him, I would have to refinance at that time. Should I?”

There is no possibility that you will be able to refinance in three months. Your equity will be reduced by the second mortgage and your credit won’t be significantly different, even if you have paid off all your overdue credit cards. The process of rebuilding your credit will take years, not months. Your best option now is to sell the house ASAP and retrieve as much as possible of the equity you have in it. (more…)

Consumers who have [tag]home mortgage[/tag]s tend to carry more debt than those without mortgages, but they manage it well and their credit scores are higher, according to a study released Monday by a division of the Experian credit rating agency. Experian Consumer Direct, an [tag]online credit service[/tag], said a nationwide study found that consumers who have a mortgage carried an average of $24,565 in [tag]credit card[/tag] and other installment debt in addition to their mortgages compared with $4,565 in installment debt carried by consumers without a mortgage.

Credit scores are important because lenders use them to set the terms on loans; a poor credit score can result in a consumer having to pay a higher rate for borrowing. Samah Haggag, manager of analytics, said the results show that higher debt doesn’t necessarily hurt a consumer’s score. “In this case, consumers with mortgages are doing a better job managing their credit,” she said. “When you look at the late payments, the consumers without mortgagees were much more likely to have payments past due.” (more…)

Lower monthly payments are the appeal of interest-only mortgages. But those low payments don’t last forever. Typically, within five to seven years the borrower must start to pay principal and the payments jump skyward. Members of the Financial Planning Association of Greater Indiana offer advice on whether such an option is right for you.

The quick answer to this question: never. his is especially true if the loan is variable and interest rates are rising. Unless the borrower has access to a substantial amount of liquid capital that can be used to fund the higher debt service, retire or refinance the principal, the property could quickly become the subject of a foreclosure proceeding, which often results in the loss of a substantial amount of equity. (more…)

U.S. mortgage applications rose for a second consecutive week as demand for home refinancing rose to its highest level since March, an industry trade group said on Wednesday, even as other measures point to a slowing housing sector. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity which includes both refinancing and purchasing loans, last week increased 1.4 percent to 561.2 — its highest level in 11 weeks.

Borrowing costs on [tag]30-year fixed-rate mortgage[/tag]s, excluding fees, last week averaged 6.54 percent, up 0.09 percentage point from the previous week when they sank to their lowest level since March. The rates hit a four-year high of 6.86 percent last June. After historically low mortgage rates helped fuel a five-year housing boom, the sector is feeling the heat and most analysts agree the market is cooling off from its record run. They point to housing market indicators showing sliding sales, swelling supply and slower price appreciation. (more…)

Freddie Mac today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.48 percent with an average 0.4 point for the week ending August 24, 2006, down from last week’s average of 6.52 percent. Last year at this time, the 30-year FRM averaged 5.77 percent. This is the lowest the 30-year FRM has been since the week ending April 6, 2006, when it averaged 6.43 percent.

“The Fed has acknowledged that it is closely monitoring the housing market as it slows down from last year’s record pace,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Although this fuels arguments about whether we will experience a soft landing or a bursting housing bubble, market watchers also perceive that it possible that the Fed may stop raising short-term interest rates over the near term. This perception takes upward pressure off mortgage rates.” (more…)