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Residential financing hits ground running in January

Posted on Wednesday, January 18, 2017 at 1:41:05 PM

The residential real estate market is among the most important one of all in the context of the United States economy. Remember, when the financial crisis and Great Recession occurred roughly one decade ago, it was heavily influenced by the mortgage market and, more specifically, lending practices of banks deemed too big to fail. Luckily, there has been a lot of reason to view the real estate and relevant lending markets with hope in the past couple of years, and those positive trends appear to be surging in the first month of 2017. 

Higher rates not lowering application volume
The Wall Street Journal reported that the average 30-year fixed-interest mortgage rate increased steadily in the final two months of 2016, going from the low 3 percent range to above 4 percent nationally. Notably, this was viewed as a necessary move from entities like the Federal Reserve because the economy was in such better shape than most other times in the past decade. According to the news provider, while the national average went up significantly, the highest increases in interest rates were seen in coastal areas, which are projected to continue on this track for a while.

Some areas, including Nantucket, Massachusetts, and New York, might breach the 5 percent interest rate mark in the next few months. The biggest concern here is that it would negatively impact the home buying component of residential real estate. However, in a true show of a resurgent economy, this does not appear to be the case at all.

Rather, Consumer Affairs reported that the number of mortgage applications increased in each of the first two weeks of January 2017. What's more, the website, citing data from the Mortgage Bankers Association, pointed out that refinancing applications - which contracted significantly when interest rates first began to rise in Q4 2016, also increased by 7 percent between the first and second weeks of the year. This means that in spite of rate increases, current and prospective homeowners are still confident enough to apply for refinanced or entirely new lines of credit for residential real estate. 

Another reason to celebrate
NerdWallet recently reported that foreclosures have sunk to their lowest volume recorded in the United States since 2007, or right before the economic crisis. This is one of the clearest signs that the nation's financial situation is firing on all cylinders, considering low foreclosure rates translate to a far more confident and stable consumer landscape, which in turn fuels strong performances among retailers. What's more, NerdWallet noted that the number of foreclosures fell by 14 percent in 2016 compared to 2015, which is an impressive drop to say the least. 

Individuals interested in refinancing their mortgage or applying for an entirely new one to purchase a home should always consider working with their local, community bank to identify the best possible program in accordance with unique needs and goals.