In Indianapolis many homeowners are now turning to refinancing to lessen their monthly payments as home mortgage interest rates fall to 4.5% for 30-year loans.
Senior Vice President and Union Savings Bank head for the Indiana region Michael Mohr said, “The growth in the number of refinancings has been strong throughout this year. But the last two or three weeks, it has just gone to another higher level.”
“We’re very busy,” he added.
A report from the Mortgage Bankers Association last week showed refinancing on existing mortgages rose to 9.2 percent compared to the previous week as homeowners took advantage of the lowest interest rates in 50 years. Almost 79 percent of mortgage applications throughout the country were for refinancing.
Applications for new home purchases decreased 30 percent last month.
Three years after the collapse of the housing and mortgage business, arising trends in the mortgage industry are somewhat contradictory. On one hand, mortgage brokers maintain that more loans are being closed; on the other hand, credit standards in loans are becoming stricter.
Real estate resale values around the country have relatively stabilized, although several bankers insist several refinancing schemes might not work because a lot of homeowners owe more than what their homes are actually worth.
Before, borrowers can secure loans with a creditworthiness score of around 500 without needing to pay money upfront. Nowadays, a borrower must have a score of at least 620 so they can avail of a government-backed loan.
