Nov 16, 2010

Home loan demand rises due to low interest rates.

U.S. mortgage applications rose last week as there is an increase in demand for new loan purchase and refinance. More and more people are trying to take advantage of the low interest rates and lock in on them before it increases. Mortgage Bankers Association says there is an 5.8 % increase in the mortgage applications, which includes both purchase and refinance loans.

Michael Fratantoni, the MBA's vice president of research and economics, said in a statement that the increases in purchase application coincide with the October's employment report which indicates some improvement in the economic growth.

However this increase in home loans is very little, as the lending standards have become very tight thereby preventing many homeowners from taking advantage of the low interest rates. Cameron Findlay, chief economist at in Charlotte, North Carolina, says "underwater mortgage" -- where the amount owed on the mortgage exceeds the home's value -- "are one of the biggest banes of the homeowners who want to refinance.This negative equity makes many homeowners unqualified for refinancing and prevents some from selling." Despite the slow progress, the very fact that there is an increase in the demand for mortgage application is an indicator of some positive activity in the housing sector and the team at PrivoCorp hope that this trend continues and the economy keeps on improving. To read more on this, check out

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