Mortgage Interest Rates Plumb Lows
Mortgage interest rates are much lower now than they were a few months ago. In fact, long term mortgage rates are at lows not seen for four years. Mortgage News Daily reports on the new 30 year fixed mortgage interest rates:
The 30-year fixed-rate mortgage (FRM) averaged 5.47 percent with an average 0.7 point for the latest week compared to 5.53 percent with 0.7 point during the week ended December 4. This is the lowest interest rate for the 30-year FRM since March 2004 when it averaged 5.40 percent.
This is an interesting development, spurred in part by a huge decline in the initial jobless report for November. When the mumbers showed record unemploymnet, it caused bond yields to fall. And, as bond yields pull back, there is room for long term mortgage interest rates to ease as well.
Will lower mortgage rates help the housing market?
Of course, it remains to be seen whether or not these new, lower mortgage loan rates will help the housing market. While the rates certainly look inviting to new homebuyers (and even those looking to refinance), it may not help prevent foreclosures. And it may not mean more houses bought. While more people may apply for home loans, there is not guarantee that they will get them: Mortgage lenders are still showing reluctance to finance those whose credit may not be perfect, or who may not have a larger down payment.
Another consideration is the fact that lower mortgage interest rates are not very likely to help in terms of foreclosures. Even though the foreclosure rate drew back last month, there are predictions that next year will see a huge increase. Loan modifications and foreclosure moratoriums and other efforts to fight foreclosures are only like to work in the short term, and this is a long term problem.
