Mortgage Report - Mortgage Rates Stable In 2006 - part 2
by Rick Hendershot
Healthy economy leads to more relocation - A vibrant economy and strong residential real estate activity drives commercial activity as well. And that usually leads to corporate relocations as people follow business and employment opportunities. That means increased real estate activity.
Generation X effect - As baby boomers begin retiring and moving out of the real estate buy and sell cycle, Generation Xers have taken their place with a vengeance. The incomes of Gen Xers are generally higher than the previous generation, and financing is easier to get, so they have been able to buy more expensive homes sooner than boomers did. Gen Xers now make up 47% of the total homeownership segment in the U.S., and have an especially large impact on downtown and suburban communities.
Many UK mortgages not covered by life insurance
A recent report by Sainsbury's Bank estimates that as many as 4.2 million people in the UK have mortgages that are not covered by life insurance. That means that as much as GBP217 billion worth of mortgages are open to be passed on to loved ones. This number has grown significantly over the last few years as the number of new mortgage approvals has grown.
Of course inheriting the debt associated with a property would be accompanied by ownership of the property itself. And with current prices on the rise, most people, even if forced to sell a property because they could not pay the mortgage, would not be as badly off as the report might suggest.
UK borrowers opt for 2 year fixed mortgages
According to a recent survey of mortgage purchases in the UK, there was a significant shift in January towards 2 year fixed mortgages. In January 39 percent of borrowers chose this option compared to 27 per cent in December.
Interestingly enough, only 9 percent of buyers opted for a longer term fixed mortgage in January, compared to 16 percent in December. This was in spite of longer term mortgages (up to 10 years fixed rate) at less than 5 percent.
The popularity of a 2 year fixed mortgages suggests that buyers assume rates have bottomed out, at least in the medium term, but are not convinced they may not go down further two or three years from now.
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