How Home Loan Rates are affected by European Financial Crisis

26.05.10

Home loan rates had been expected to go up this summer but because of the financial problems in Europe, international investors are coming back to the U.S. for safe investments, which are bringing interest rates back down.

Mortgage Rate Trends

Freddie Mac reported the average interest rate on a 30-year mortgage as 4.84% last week, which is the lowest they have been since December of 2009. The rate had gone up to 5.27% in early April, and further increases had been anticipated.

Foreign investment in Treasury bonds brought the yield on 10-year notes down to 3.2% last week, which brought the mortgage loan rate down too.

What the Mortgage Loan Rate Means for the US Housing Market

Here’s an unexpected correlation: Every 1% change in the interest rate on a home mortgage loan is roughly the same as a 10% change in the cost of the house. That means getting a $180,000 home with a 5.5% interest rate is about the same as paying $200,000 for it at 4.5% interest.

Source: Credit Loan (blog)

Home equity loans

Simple example of borrowing from equity to fuel consumption

Home Equity Loan Terms - News


Mortgage Rates Today 9/9: 30 Year Home Mortgage Rates Averaging 4.38% MonitorBankRates.com
- Sep 09, 2010
table border=0 cellpadding=2 cellspacing=7 style=vertical-align:top;trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNEmREjYVpo18daf2AgUnFVL_gOY1Qamp;url=http://www.smh.com.au/money/investing/smart-ways-to-buy-and-finance-property-20100907-14yib.htmlimg src=http://nt3.ggpht.com/news/tbn/B7sAGqRueVPaHM/6.jpg alt= border=1 width=80 height=80 /br /font size=-2Sydney Morning Herald/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbr /div style=padding-top:0.8em;img alt= height=1 width=1 //divdiv class=lha href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNGHZVDI6h98goFX0pPNKRxBd81flwamp;url=http://www.monitorbankrates.com/rates-mortgage/mortgage-rates-today-99-30-year-home-mortgage-rates-averaging-4-38-5191bMortgage Rates Today 9/9: 30 Year bHome/b Mortgage Rates Averaging 4.38%/b/abr /font size=-1bfont color=#6f6f6fMonitorBankRates.com/font/b/fontbr /font size=-1Current 10 year bhome equity loan/b rates are averaging 6.884 percent, unchanged from the previous week#39;s average bhome equity loan/b rate. 15 year bhome equity/b b/b/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFA7fyoO27m1trYxigdewC-enqK8Aamp;url=http://www.stockmarketsreview.com/realestate/2010/09/07/what-is-home-equity-loan-or-a-heloc/What is bHome Equity Loan/b or a heloc?/afont size=-1 color=#6f6f6fnobrStock Markets Review/nobr/font/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFH3UCrw9iIh1TgrJoMfDECxuwxagamp;url=http://www.smh.com.au/money/investing/its-not-an-atm-20100907-14yi8.htmlIt#39;s not an ATM/afont size=-1 color=#6f6f6fnobrSydney Morning Herald/nobr/font/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNGk9jDytjOvE8PvXrqbjR_G399hawamp;url=http://www.mortgage11.com/2010/09/bad-credit-home-mortgage-refinance-loan-made-easy/Bad Credit bHome/b Mortgage Refinance bLoan/b Made Easy/afont size=-1 color=#6f6f6fnobrMortgage11/nobr/font/fontbr /font size=-1 class=pa href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNEQaEvhww9PpVFoAVZYRSFrTGtgTAamp;url=http://www.foxbusiness.com/markets/2010/09/08/home-buying-week-pct-year/nobrFOXBusiness/nobr/anbsp;-a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFR2ct3bD3LtlvL5Q6SM_g_x3gxfwamp;url=http://www.loansafe.org/how-to-obtain-a-mortgagenobrLoanSafe/nobr/anbsp;-a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNG-rSG6oh5UR_5ulYt-gZYFf-Fadgamp;url=http://rismedia.com/2010-09-06/company-profile-bank-of-america-home-loans-works-with-real-estate-professionals-to-offer-buyers-a-better-purchase-experience/nobrRisMedia.com (press release)/nobr/a/fontbr /font class=p size=-1a class=p href=http://news.google.com/news/more?pz=1amp;ned=usamp;ncl=dNMoohf2hNUHULMwGEG8N67_ObkTMnobrball 377 news articlesnbsp;raquo;/b/nobr/a/font/div/font/td/tr/table

Interest Rate Roundup home equity Bankrate.com
- Sep 09, 2010
table border=0 cellpadding=2 cellspacing=7 style=vertical-align:top;trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFaZUDqirRRuaLW0xyIWZPFK6JSnAamp;url=http://www.komonews.com/news/business/102541234.htmlimg src=http://nt0.ggpht.com/news/tbn/kJE1vICkDh4rFM/6.jpg alt= border=1 width=80 height=80 /br /font size=-2KOMO News/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbr /div style=padding-top:0.8em;img alt= height=1 width=1 //divdiv class=lha href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFJSTc9z1WXFufj6xPrKITN2lFMxQamp;url=http://www.bankrate.com/finance/home-equity/national-home-equity-loan-rates-for-sept-9-2010.aspxbInterest Rate Roundup bhome equity/b/b/abr /font size=-1bfont color=#6f6f6fBankrate.com/font/b/fontbr /font size=-1The average bhome equity/b line of credit, or HELOC, fell 2 basis points, to 5.46 percent. Meanwhile, bhome equity loan/b rates also fell 2 basis points, b/b/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNHeAN1VOIl5-goGraXU1dRnpyHTbQamp;url=http://www.bankrate.com/finance/home-equity/paying-mortgage-with-heloc-is-risky.aspxPaying mortgage with HELOC is risky/afont size=-1 color=#6f6f6fnobrBankrate.com/nobr/font/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNHR12YZEbkaOGTiPyUC7mg7foBIHgamp;url=http://www.chicagojournal.com/News/09-08-2010/More_people_paying_cashMore people paying cash/afont size=-1 color=#6f6f6fnobrChicago Journal/nobr/font/fontbr /font size=-1 class=p/fontbr /font class=p size=-1a class=p href=http://news.google.com/news/more?pz=1amp;ned=usamp;ncl=d2l7UIY_f9U10bM_G4SLRFHHGHj5Mnobrball 236 news articlesnbsp;raquo;/b/nobr/a/font/div/font/td/tr/table

Housing regulator prepares changes for reverse mortgages Knoxville News Sentinel
- Sep 09, 2010
table border=0 cellpadding=2 cellspacing=7 style=vertical-align:top;trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNEyksv7ovHWiJQZz02EJwzo_Dy9xgamp;url=http://gamutnews.com/fha-short-refinance-program-not-a-one-size-fits-all-plan/1980/img src=http://nt0.ggpht.com/news/tbn/wOOQ_rIvZ4WFNM/6.jpg alt= border=1 width=80 height=80 /br /font size=-2Gamut News (blog)/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbr /div style=padding-top:0.8em;img alt= height=1 width=1 //divdiv class=lha href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNENoF4XtyWFuOQUWNkcedqE-5d0ngamp;url=http://www.knoxnews.com/news/2010/sep/09/housing-regulator-prepares-changes-reverse-mortgag/bHousing regulator prepares changes for reverse mortgages/b/abr /font size=-1bfont color=#6f6f6fKnoxville News Sentinel/font/b/fontbr /font size=-1Because a smaller amount could be borrowed, the saver bloan/b could be marketed as an alternative to a bhome equity/b line of credit to seniors on fixed incomes b/b/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNH3vjM-vxtr2oJ_p8ozcY8gH6p5zAamp;url=http://thelegalbroadcastnetwork.squarespace.com/the-lbn-blog/2010/9/8/reverse-mortgage-facts-sun-american-mortgage-mesa-arizona.htmlReverse Mortgage Facts--Sun American Mortgage--Mesa, Arizona/afont size=-1 color=#6f6f6fnobrLegal Broadcast Network (blog)/nobr/font/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNG40GR6S1MktLYNfGUrjAUF300wSwamp;url=http://www.loansafe.org/fha-new-loan-to-value-credit-requirementsNew FHA bLoan/b-to-Value and Credit Score Requirements/afont size=-1 color=#6f6f6fnobrLoanSafe/nobr/font/fontbr /font size=-1a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNHnYhoGXZeT5tOqH-nH75gERWFbGAamp;url=http://seekingalpha.com/article/223956-the-fha-s-new-minimum-credit-score-requirement-won-t-change-muchThe FHA#39;s New Minimum Credit Score Requirement Won#39;t Change Much/afont size=-1 color=#6f6f6fnobrSeeking Alpha (blog)/nobr/font/fontbr /font size=-1 class=pa href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFO46Okbk2ACW9BEcjSfS2-_44LEQamp;url=http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-fha-refinance-program-troubled-asset-relief-program-tarp-barclays-capital-corelogic-fha-loans-home-foreclosures-bank-reo-sales-news-3131.phpnobrReal Estate Channel/nobr/anbsp;-a href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNGejG3IM8BeR8wumYvYu_J9k_UWrAamp;url=http://www.pe.com/business/realestate/stories/PE_Biz_D_refinancing09.242b0e9.htmlnobrPress-Enterprise/nobr/a/fontbr /font class=p size=-1a class=p href=http://news.google.com/news/more?pz=1amp;ned=usamp;ncl=dPbgZbg1dMhIbGMGH62lWsVgGJFHMnobrball 36 news articlesnbsp;raquo;/b/nobr/a/font/div/font/td/tr/table

Home buying up in week, but down 40 percent in year Reuters
- Sep 09, 2010
table border=0 cellpadding=2 cellspacing=7 style=vertical-align:top;trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFsB7nmLWz2SWeIop3LTVGZTr1ywwamp;url=http://www.reuters.com/article/idUSTRE67O2AU20100909img src=http://nt1.ggpht.com/news/tbn/lUcE1iChb0_e_M/6.jpg alt= border=1 width=80 height=80 /br /font size=-2Reuters/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbr /div style=padding-top:0.8em;img alt= height=1 width=1 //divdiv class=lha href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFsB7nmLWz2SWeIop3LTVGZTr1ywwamp;url=http://www.reuters.com/article/idUSTRE67O2AU20100909bbHome/b buying up in week, but down 40 percent in year/b/abr /font size=-1bfont color=#6f6f6fReuters/font/b/fontbr /font size=-1Unemployment or underemployment, lack of bhome equity/b in existing houses and a shortage of money for a downpayment remain among the main impediments to home b/b/fontbr /font size=-1 class=p/fontbr /font class=p size=-1a class=p href=http://news.google.com/news/more?pz=1amp;ned=usamp;ncl=d2ffYcsbdI1nkgMnobrband morenbsp;raquo;/b/nobr/a/font/div/font/td/tr/table

Consumers cut back on credit card use once again The Associated Press
- Sep 08, 2010
table border=0 cellpadding=2 cellspacing=7 style=vertical-align:top;trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serif/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbr /div style=padding-top:0.8em;img alt= height=1 width=1 //divdiv class=lha href=http://news.google.com/news/url?sa=tamp;fd=Ramp;usg=AFQjCNFdNDAaqnYbmDaVMhZfZ67hngk1uAamp;url=http://www.google.com/hostednews/ap/article/ALeqM5g1RbLCbz_AJrpIhbI4fRRyuNF0EgD9I409OO1bConsumers cut back on credit card use once again/b/abr /font size=-1bfont color=#6f6f6fThe Associated Press/font/b/fontbr /font size=-1The Fed#39;s credit report covers credit card debt, auto bloans/b and other debt not secured by real estate. It does not cover home mortgages or bhome equity/b lines b/b/fontbr /font size=-1 class=p/fontbr /font class=p size=-1a class=p href=http://news.google.com/news/more?pz=1amp;ned=usamp;ncl=dtUf94F2iPI0pCMnobrband morenbsp;raquo;/b/nobr/a/font/div/font/td/tr/table