Mortgage Rates Tumble Lower

December 16, 2011

Fixed mortgage rates have again hit record lows. Is it making a difference to our housing recovery?

Freddie Mac on Thursday released its Primary Mortgage Market Survey for the week ending December 15  to show that the 30-year fixed-rate mortgage matched its all-time low of 3.94 percent, while the 15-year fixed-rate mortgage set a new record low at 3.21 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) hit 2.86 percent this week, also a new all-time low.

Lots of for sale signs outside houses.“Mortgage rates were at or near all-time record lows this week amid a rough environment for housing,” said Frank Nothaft, vice president and chief economist for Freddie Mac.

“In its December 13th monetary policy announcement, the Federal Reserve reiterated the housing market remains depressed. Over the first nine months of 2011, households lost almost $400 billion in property values which contributed to a $1.4 trillion reduction in overall net worth. In addition, serious delinquency rates (90 or more days delinquent plus foreclosures) on mortgages increased slightly between June 30 and September 30 of the year, breaking a six-quarter consecutive decline, according to the Mortgage Bankers Association (MBA).”

According to the MBA, some Americans are taking advantage of the low rates to refinance, but few are using them to buy homes.

For the week ending December 9, the MBA’s Market Composite Index increased 4.1 percent from the previous week. That includes a 9.3 percent increase in the Refinance Index, but also an 8.2 percent decrease in the Purchase Index.

This has been a helluva year for the real estate industry. And, the National Association of REALTORS®
just announced that recently discovered data errors mean the national and Chicago real estate markets are even worse off than thought.

2011 is almost over. I say let’s look forward to a much better 2012.

Categories: Economy

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