Mortgage Rates Hit New 4.36% Record Low But Does It Really Matter?

The weekly report from Freddie Mac shows mortgage rates have once again hit a record low, but does it even matter? With housing still looking to get worse before it gets better, it seems that the new 4.36 percent rate for the 30-year fixed mortgage is going to waste.

Mortgage Rates Drop Even Lower

Despite the fluke increase in 30-year fixed mortgage interest rates seen last week, we’ve watched rates continuously decrease since the spring.

In addition to seeing another 30-year fixed record drop from 4.42 percent last week, the 15-year fixed mortgage loan also decreased from 3.90 percent last week to 3.86 percent this week. This rate is the lowest seen since the records started in 1991.

Home Sales Also See Record Lows

The irony in seeing such low mortgage rates is that the housing market has not benefited much at all. While reports show that refinancing is at its highest level since May 2009 and has made up 82.4 percent of all new loan activity, nobody’s going out to buy new homes.

On Wednesday, we reported that new home sales saw a 27-percent drop in July. This was the largest one-month drop seen in history. What’s interesting is that the record low mortgage rates were in full swing during the same month.

Do Low Rates Matter Right Now?

Unfortunately, no matter how low the rates drop, people probably won’t be buying homes any time soon. The home buyer tax credit is no longer available to those looking to buy and mortgage lenders still have a reputation for tightening up their lending because a whopping 25 percent of consumers have subprime credit scores, largely due to the recession.

With many still out of work, foreclosing on homes and filing for bankruptcy, potential buyers just don’t feel stable enough–or aren’t qualified–to take on a serious loan. So until the economy and housing market begin to recover (see why this may not happen), the record lows we continue to see probably won’t matter at all.