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WASHINGTON — The average rate on the 30-year fixed mortgage hovered above its record low for a fifth straight week. Despite the great opportunity, few have the means or stomach to buy or refinance in the depressed housing market.
Freddie Mac said Thursday the rate on the 30-year home loan rose slightly to 4 percent from 3.98 percent the week before. Eight weeks ago, it dropped to a record low of 3.94, according to the National Bureau of Economic Research.
The average rate on the 15-year fixed mortgage was unchanged at 3.30 percent. Eight weeks ago, it too hit a record low of 3.26 percent.
Rates have been below 5 percent for all but two weeks this year. Yet this year could be the worst for home sales in 14 years.
Mortgage rates track the yield on 10-year Treasury note. The yield rose this week after investors, encouraged by central banks' joint effort to ease lending standards, shifted their money into stocks. Treasury yields rise when buying activity decreases.
Low mortgage rates haven't translated into higher home sales. Mortgage applications have dropped over the past few weeks, according to the Mortgage Bankers Association.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.
The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.
The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year was unchanged at 0.7 and 15-year fixed mortgages rose from 0.7 to 0.8.
The average rate on the five-year adjustable loan ticked down to 2.90 percent from 2.91 percent. The average rate on the one-year adjustable loan also fell, declining to 2.78 percent from 2.79 percent.
The average fees on the five-year and one-year adjustable loans were unchanged from 0.6.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
Associated Press contributed to this report.
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The rate has been low for ages now, yet the housing market is stagnant for the most part. Too few have the money to buy a house or a job to save the money for a down payment and for the monthly mortgage payments. In addition, the low rates will affect savings interest for years to come.
It should be a great time for people to buy, but this is how bad things have become. I am fortunate enough to have my mortgage paid off and would like to buy vacation property in N. Wisconsin, but with this economy, it would be too much of a risk with a family income of less that 50K a year. The smart thing to do now is to prepare for a much worse economy. If it happens, one is ready for it, and if it doesn't nothing will have been lost. There was change I believed in, but what I believed about that change was NOT what was promised.
Maybe to get the housing market going again, interest rates actually need to start going up? People are not investing right now because they get such small returns. If interest rates went up the economy might pick up creating more demand for houses.
Smart thinking 'OldSchoolLatinTeacher'. Too many people s t r e t c h their budget too thin. This is just another ploy by financial institutions who tack on 'money-rich' (for them) closing costs and extend your 'interest only' payments. What a racket.
Mortgage rates are low because demand is low. And that demand isn't going anywhere in our lifetimes.
Thanks to Clinton and Bush which oversold the market trying to drive up the home ownership ratio's by 'pushing' more economically deprived into owning homes only to saturate the market until it collapsed in 2006. Thanks Clinton. Thanks Bush.
Oh and don't feel left out thanks Obama for not recognizing the importance of the housing market to a healthy America and allowing it to get out of control in 2008.
It's amazing what a few idiots with absolute power can do to the health of the country.
I agree mostly. However mortgage rates are being kept low now because the Federal Reserve is or was recently buying up mortgages. Mortgages are owned or guarnteed by government entities like FHA and Fannie Mae keeping mortgage rates down as well.
http://www.cnbc.com/id/45506837
How can the unemployed buy homes?
(Hint: not with more Government, more programs, more debt, more spending, and more handouts to special interest groups)
Thank you, debt and spending does not solve a debt disaster.
It's a trap!