Mortgage rates have fallen for the fourth straight week to yet another record low and are expected to continue to drop even further. The average on a 30-year fixed mortgage fell to 4.01 percent this week, according to Freddie Mac. That’s the lowest rate since the they began keeping records in 1971. The last time long-term rates were lower was in 1951, when most long-term home loans lasted just 20 or 25 years.
The average on a 15-year fixed mortgage, which is a popular refinancing option, dropped down to 3.28 percent. Economists say that’s the lowest rate ever for the loan.
Mortgage rates tend to track the yield on the 10-year Treasury note. The 10-year yield has risen this week to around 2 percent. A week ago, it touched 1.74 percent — the lowest level since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. As recently as July, the 10-year yield exceeded 3 percent.
Mortgage rates could fall even further after the Federal Reserve announced last week that it would take further action to try to lower long-term rates.
Even with mortgage rates continuing to drop to record lows, it has done very little to help the home buying market. Most would be homebuyers still just don’t have enough cash, equity and/or collateral to secure a home loan. This is all due to the failing economy, which has left the nation with high unemployment, scant wage gains and debt loads that represent too heavy of a burden for many people.
Others can’t qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Credit scores are not where they should be for most, and a 20 percent down payment is asking way too much, as most people just don’t have this cash upfront.
This year is shaping up to be among the worst for sales of previously occupied homes in 14 years. Few are buying, even though the average rate on the 30-year fixed mortgage has fallen to around 4 percent.
A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. This is ideal for many, yet apparently not on the top of many homeowners “to do” list, as simply surviving in the current economy is the main goal.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
Other fixed mortgage rates were almost unchanged, as the average rate on a five-year adjustable-rate mortgage was held steady at 3.02 percent. The average for the one-year adjustable-rate mortgage actually spiked up a bit up to 2.83 percent.
It is too bad nobody can afford a home these days, as you would be receiving the best mortgage rate in history.