The mortgage world has had ups and downs over the past couple of days with mortgage rates dropping below 4 percent for the first time ever, while home ownership dropped to the lowest point in over 70 years. One bit of data would normally impact the other in a healthy housing market, which shows just how badly turned upside down the market truly is.
30-Year Fixed Mortgage Rates Drop Below 4 Percent
The average rate on the 30-year fixed rate mortgage dropped this week to 3.94%, which marks the first time it has ever fallen below 4 percent, according to a report released by Freddie Mac on Thursday.
The rate dropped from 4.01%, which had been the lowest rate on record. 15-year fixed mortgage rates also experienced a new low, dipping to 3.26% for the week.
Mortgage rates are tumbling because they track the yield on the 10-year Treasury note, which has fallen in recent weeks thanks to investor concerns regarding the U.S. economy and debt crisis in Europe. They have shifted their money out of stocks and into the safety of these treasuries, pushing the yield down.
Home Ownership Experiences Biggest Drop Since Great Depression
A separate report released by the Census Bureau has revealed the percentage of Americans who own homes has declined to the lowest point since the Great Depression. According to the report, this decline in home ownership (to 65.1 percent) occurred in April 2010, a time in which rates were higher than now but weeks away from setting new records.
While the Census report does not directly reflect data revealed in the Freddie Mac report, it shows that even last year, homeowners were reluctant to take advantage of lower rates. They”re not expected to do so now.
Many prospective buyers are concerned that the economy is too weak to guarantee the financial security necessary to take on a mortgage loan. This fear is backed by recent news of a 2-year high in layoffs. Those who want to purchase homes or jump on refinancing opportunities find that banks’ new stricter guidelines mean they don’t qualify.
Unfortunately, this means record-low rates will most likely go unused as this year shapes up to be among the worst for home sales of previously-occupied homes in 14 years.
