Fixed Mortgage Rates Are Climbing Up All Over the United States?

The pressure on mortgage rates in America is mainly attributed to external forces. As many media sources have reported, major players in the US Debt market are still not satisfied with the economical and fiscal measures taken by the American Government. With the outside pressure on interest rates and the future liquidity situation in housing market still looking bleak, the American recession continues to dampen. Long-term Treasury bond rates, which are being closely watched by experts, have doubled recently alongside mortgage rates. The jump in long-term Treasury bond rates, which previously hovered at around two percent, was prompted after Chinese politicians negatively remarked about long-term projections concerning the American economy. These two interlocking factors- Long-term Treasury bond rates and foreign sentiment concerning the progress and condition of the U.S. economy, will play the most effective role in moving mortgage rates as they are considered to be the two most influential forces affecting mortgage rates.

Rise in the U.S. Housing Sales, fueling recovery hopes??

"U.S. existing home sales notched their third monthly rise in June and prices hit the highest level since October, fueling hopes that the housing sector is finally on the mend and will help propel a broader economic recovery.
Other data on Thursday showed a jump in new claims for jobless aid last week, but claims by those already receiving benefits declined. The Labor Department said the numbers were distorted by a seasonally unusual pattern of layoffs in the auto sector that should fade in the next week or so.
Some analysts, however, read the jobs report as evidence that employment conditions are stabilizing and said this chimed with other signs that the economy has stopped shrinking.
U.S. stocks surged more than 2 percent on the home sales data. The Dow Jones industrial average closed above the 9,000 mark for the first time since January as investors took heart that a turn in the housing market -- seen as a linchpin of the economy -- would end a severe U.S. recession and help deliver growth over the rest of the year. The Nasdaq registered its 12th straight day of gains, its longest winning streak since 1992.
The National Association of Realtors (NAR) said sales of existing homes in June rose 3.6 percent to an annual rate of 4.89 million units, compared with a downwardly revised 4.72 million pace in May.
The June reading was the fastest sales pace since October, and topped forecasts for a 4.84 million unit annual pace."

Is the Loan Modification Plan Working?

"The Obama administration has said it wants to wrestle the foreclosure issue to the ground by encouraging mortgage loan modifications, but its efforts have gotten little traction.

Loan modifications occur when a lender agrees to change terms of a troubled borrower’s mortgage; the most common approach is to reduce the loan’s interest rate.Cutting the amount of principal owed — an option that could be of more help to a borrower — is rare because it means homeowners pay less money back to the bank over time. "

According to a Treasury Department report, "In the first quarter, loan companies modified 185,156 mortgages, up 55 percent from the previous quarter. But the number of foreclosures in process increased to 844,389, up 22 percent.And nearly one in four borrows who received a mortgage payment reduction fell behind again within six months."

Is Mortgage Delinquency on the Rise?

"As expected, the mortgage sector continued to experience increases in the delinquency rate due to worsening economic conditions in both the labor and financial markets," said a senior consultant in TransUnion's financial services group.

Borrowers who were 60 days or more behind on their mortgage payments rose to 5.22 percent for the first three months of the year, TransUnion said. That's 62 percent higher than the 3.23 percent delinquency rate for the first quarter of 2008.

Nevada, Florida, Arizona and California continue to be the hardest-hit states, while North and South Dakota, Alaska and Wyoming remain the states with the lowest delinquency rates.
Hawaii saw the biggest increase in delinquencies from the fourth quarter of 2008 to the first quarter of 2009, with a 35.5 percent jump.

How is the rate of unemployment affecting the Housing Market?

Even as the nation's economy begins clawing its way out of the worst recession in 60 years, there are growing signs that this recovery could come with an unsettling twist: The wheels of commerce may begin to turn again without any substantial boost in jobs.

Not only is the national unemployment rate, now 9.4%, likely to climb into double digits later this year, but it is also expected to remain there well into 2010, economists say. That would prolong the misery of the unemployed, squeeze retailers and other businesses, and add millions of dollars in government costs and lost productivity. It could even threaten the recovery itself.

Are Foreclosures on the Rise?

"Just as the nation's housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy. Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration's home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments."

U.S. Plan for Modifying Mortgages working?

The Obama administration's plan to help millions of troubled homeowners avoid foreclosure by reducing the size of their mortgage payments is just getting off the ground. So far, two months after the program went into effect,about 55,000 homeowners have been extended loan modification offers,according to a senior administration official. At the same time, foreclosures continue apace.

As per CNBC, Obama is expanding the homeowner bailout so that underwater homeowners with a 125% LTV ratio can refinance more easily through Fannie and Freddie. Earlier LTV ratio could only be 105%.It seems that Obama wants to have more sub prime loans as a solution to the current problem.

Like the original subprime loans, they're really only going to work out of home prices grow rapidly over the next few years, otherwise you're looking at the perpetuation of people living underwater in their homes.