The inauguration of Barack Obama, the 44th President of the United States, ushered in a new era of hope. In spite of the recession, the event offered so many reasons and opportunities to celebrate. As the President enters his second week in office, the economy is still the most pressing concern. More people are out of work and consumer confidence is low. The new team in the White House plans to give a boost to small business owners and regular middle class Americans who are struggling, as well as restructure the stimulus plan introduced by the previous administration. It plans to offer low home mortgage rates in the hopes that it will help boost the ailing housing market. The promise of continued low home mortgage interest rates is the one bright light for consumers in this economic downturn. For those with good credit, now is the time to secure the lowest interest rates on a home mortgage the country has seen since the 1970s.
As the country greeted the New Year, the Fed maintained extremely low rates. When those rates are low, it means interest rates for consumer loans and mortgages will also be low. In spite of home mortgage rate cuts, banks have adopted much more restrictive lending practices. As a result of the credit crisis, banks are now more risk averse. They are requiring higher credit scores, bigger down payments and cleaner credit histories. So borrowers who may have qualified for a home mortgage last year, may not now. A consumer looking to refinance a home mortgage will be under the same scrutiny as one applying for a home mortgage for the first time. In many areas of the country, homeowners have lost equity from a drop in values and are struggling to lower their home mortgage payments. That makes refinancing extremely difficult, since banks are now requiring that consumers have higher percentages of equity to qualify.
Some analysts worry that the significant amount of current government spending will cause the interest rates to go up in the next few years, due to inflation. Consumers who have good credit scores and solid credit reports are not taking any chances and are seizing the opportunity to secure low home mortgage rates, particularly for refinancing. The savings accrued by lower monthly home mortgage payments can be enough to help many consumers weather the economic storm.
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