After weeks of hovering near a new record low, U.S. mortgage rates finally reached it by dropping to the lowest point in 60 years, according to mortgage giant Freddie Mac. Despite this drop in rates, however, experts say that it is doing little to encourage prospective homeowners to go out and buy.
30-Year Fixed Drops to 4.09 Percent
Freddie Mac announced yesterday that the 30-year fixed loan reached an average rate of 4.09 percent, which is the lowest rate on record. While the 15-year fixed did not reach a new record, it sunk to an average rate of 3.30 percent, down from 3.33 percent last week.
The reason given for the continued drop in rates is that investors are concerned over the state of the European debt markets. With U.S. Treasury bond yields low, mortgage rates were able to ease once more this week.
Low Mortgage Rates Not Aiding Housing Market
Despite the fact that rates have reached a record low, experts don’t expect this to impact the housing market. The economy is still in a tough position. Unemployment is resting at 9.1 percent and the threat of layoffs is always present, which means not many people are not interested in taking on a long-term loan.
Then just yesterday, real estate data provider RealtyTrac announced that mortgage filing notices experienced the largest one-month jump in four years. While the company blamed the spike in filings to a backlog of foreclosure paperwork, there is no doubt that homeowners are still missing payments on their mortgages.
The Mortgage Bankers Association announced in a weekly mortgage survey that mortgage applications increased last week. However, only 23 percent of those applicants actually intended to use the loan to buy a home. The others wanted to refinance their existing properties.
Until more homeowners are willing and able to purchasing new and existing properties to fill in empty neighborhoods, the market is likely to continue its delayed recovery.
