After the mortgage crisis of 2006, in which the United States of America experienced a boom and then a devastating bust that spread across most of the globe, it seemed like it would never bounce back. Then, when the financial meltdown occurred in 2008, it seemed like mortgage rates would be stagnant for even longer, which they were.
Yet, now four years later, it finally looks like the mortgage market across the world is finally starting to make a comeback and reach the levels they were at when the economy and the market were performing at very high levels. Of course, some areas of the world were hit much harder than others.
There were many factors when considering which countries were affected the most, but all in all, it hit everyone pretty hard. But, the economy has been making a come back later and it looks like every country around the world is starting to pick up momentum and start moving in the right direction.
One of the best economic indicators is mortgage rates. The following is a list of some areas of the world that have been making steps in the right direction for stock markets:
Average Mortgage Rates in the United States
For the most part, the entire world looks at what is happening in America and then making economic decisions based on that. In many ways, America is the economic measuring stick that dictates what the rest of the world will do in reaction. In the United States, the average mortgage rates are at about 3.72-percent for a fixed rate 30-year mortgage.
This is a promising sign, but because the United States is such a large country- the mortgage rates differ from one state to the next. Yet, the overall health of mortgage rates in the U.S. has made the rest of the world feel comfortable with the global economy and their own mortgage rates.
Average Mortgage Rates in Europe
Europe was very hard hit by the financial meltdown of 2008 and has experienced a much tougher time getting its economy back on the right track. The rate of growth in Europe is much slower than the United States’ and the rest of the world for the most part.
Mortgage rates have been rising in Europe, which shows a lack of confidence in their economy overall. The rates differ from country to country, but the worst countries have mortgage rates near the 5-percent area, but overall the average is at 3.72-percent, which is right in line with the United States model.
Average Mortgage Rates in Asia
The average rates are unknown is Asia, as the countries tend to not interact with each other in terms of mortgage regulation. Singapore has the lowest at about 1-percent, while China has rates that are at more than 7-percent.
5 Items Lenders Consider When Offering Mortgage Rate
According to Mortgage News Daily, a provider of housing news and analysis, as of September 6th, 2012, the rate for a 30-year mortgage could be as low as 3.65 percent depending on your credit and other considerations. So, how do you qualify for the lowest rates? Here are five things that lenders consider before offering you an interest rate on a mortgage.
Credit Score of 720+
Credit history is an obvious one. Many of us understand that having a stellar credit score is key to getting a lower interest rate on any line of credit. Anything above 720 should put you on the fast track to a mortgage rate under four percent. If your score is not quite there, you can take steps to raise it in less than a year.
Use a budget tool that includes payment reminders. Late payment history is the number one credit score killer. The next step is to pay down your credit card debt. Lowering your debt to credit ratio will raise your credit score quickly.
Debt to Income No More Than 40%
Your ability to repay is another key. Believe it or not, a lender wants to see that you can repay the loan, crazy, huh? The lender will run a formula comparing your income to the estimated loan and insurance payments while considering the property taxes you will have to pay.
Lenders ideally want to see that all of your payments are less than 40 percent of your after tax income. You will be offered a better rate the lower that percentage actually is.
2+ Years of Steady Employment
Your work history will be scrutinized to a degree. Mortgage lenders want to see that you have had at least two uninterrupted years of employment within the same industry, preferably with the same employer. Even a short term gap is grounds for disqualification at this time.
6+ Month’s Worth of Savings
Next, is your rainy day fund. Lenders want to see a bit of financial responsibility. It helps show that you can survive a job loss or other brief unemployment. Lenders would prefer to see at least six months worth of cash reserves. This can take the form of, or be a combination of, savings accounts, pension funds, or any other investment that can be readily turned to cash.
Down Payment of 20%+
The last tip usually comes down to your down payment. Banks want to see that you have a vested interest in keeping the home, so they will want to see a twenty percent down payment before they offer you the lowest possible interest rate. The same goes if you attempt to refi. Banks want to see at least twenty percent equity before they will consider it.
While it is true that there are lenders who will offer you a mortgage even if you do not meet any of the tips in this article, you will pay for the privilege.
That payment will come in the form of a higher interest rate and having to carry additional insurance on the loan until you have met the twenty percent mark. Instead of rushing into a mortgage, take the time to meet more of the tips before you apply for a loan.