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California Home Market Rebounds with Declining Mortgage Rates for Refinance & Home Equity Loans
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By Maria Ny

California homeowners seem to be getting nervous. Just a few years ago, people believed that if you bought a home in California, that you could not go wrong because the equity always increased. The question posed today keeps coming up; Can the California housing market rebound if the interest rates for mortgage refinance and home equity loans continue to drop?

How will the California Housing Market Rebound if the Interest Rates Continue to Drop?

WHEN Alan Greenspan warned that the stock market was displaying signs of “irrational exuberance,” share prices collapsed - four years later. In September 2005, the now-retired Federal Reserve chairman said he can glimpse similar frothiness in housing prices.

“The market is as vulnerable today as the last time we had this stretched affordability in 1989,” says David Rosenberg, a Merrill Lynch economist. “It might not be on the same par as the equity bubble in the late 90’s, but it’s not far off.” Signs of this are appearing everywhere–San Diego home sales, Orange County home sales, Bay area home sales, Central California home sales and Northern California home sales are all slow. California home buying in general is sluggish.

1st and 2nd mortgage rates continue to decline.
30-year fixed rate mortgages and 15-year fixed rate mortgages have been largely on the decline for the last several weeks after reaching a 6.93 percent peak in June. Home equity rates and adjustable rate mortgages (ARMs) have also been on the decline recently. Financial markets are convinced that a slowing economy will help keep Inflation contained and allow the Federal Reserve to keep Interest rates low for the time being. According to loan officer Lynda Nelms,”second mortgage and home equity loan rates may continue to drop.”

Will the declining rates spark a California housing market rebound? At this point, at least the refinance and second mortgage markets are picking up. Because of the falling rates, refinance application volumes are on the rise again and!
second
mortgage application volumes continue to increase. “With long-term interest rates having fallen far and fast in recent weeks, a new refinance boom is well underway,” says Bob Walters, chief economist for Quicken Loans. “We’ve seen an increase in homeowners refinancing out of adjustable-rate mortgages on the verge of them resetting and out of fixed-rate mortgages that are in the mid- to high-6% range.”

Historically, lowered interest rates and housing price drops have helped spark housing market rebounds. Remember the last California housing slump from that started in 1989? The market did rebound in 1996 with a full recovery by 1997. It has since spiraled upward. Like before, lowered prices and lowered interest rates should start the California housing market rebound. It’s just a matter of time.

Maria Ny is a respected free-lance writer who has published many home equity and home refinancing related articles. Get more tips, additional info and free loan quotes at BD Nationwide Mortgage for Home Equity Loans & Mortgage Refinance. For more second mortgage advice and refinance tips, visit California Second Mortgage and Refinance and California Home Mortgage Loans.


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This entry was posted on Wednesday, October 11th, 2006 at 2:06 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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