By Cheryl Reams
Mortgage rates haven’t been this low on record, but with the economy still struggling to improve and the housing market showing few signs of a steady improvement it doesn’t seem to matter that much to those considering the purchase of a home.
The Freddie Mac 30 year fixed rate home mortgage dropped to 4.58% on average nationally, more than a tenth of a point below last week’s 4.69% average. A year ago the average was well above the 5% threshold at 5.32%.
The Obama administration has rolled out a series of programs to help aid the housing market’s recovery, including the home tax credit, but the expiration of the credit as forecast by Housing Predictor has sent the housing market into a decline. Consumer confidence remains weak.
The 5-year adjustable rate mortgage hit 3.79% for the week, down .05%, indicating that although rates are low, home buyers’ remain leery of the marketplace in most areas of the country. High unemployment and additional job losses contribute to the weakening economy, which has had a hard time getting out of the doldrums.
“Growth estimates for first quarter GDP were revised down by a half percentage point over the past two months to 2.7 percent, according to the Bureau of Labor Statistics,” said Freddie Mac Chief Economist Frank Nothaft. “Annual inflation, as measured by the 12-month change in the core CPI, held at 0.9 percent in April and May, which is the slowest pace in over 44 years.”
The lack of inflation demonstrates that many policymakers in Washington, D.C., fearing concerns over inflation have little to be worried about. Home values in the over-whelming majority of the country continue to slide, except in many of the nation’s largest metropolitan markets and a handful of states, many of which are only showing improvement because of their severe record downturns.
Refinancing, however, showed an improvement, rising 12.6% from the previous week, according to the Mortgage Bankers Association weekly survey. But purchases of homes remained weak due to the lack of government incentives to stimulate the market, showing a 3.3% decline in applications for home mortgages for the week. Purchase applications were down for seven of the last eight weeks.
Another round of foreclosed properties hitting the market at discounted prices is likely to send home values lower in most of the country as the economy struggles to get out of the worst housing crash since at least the Great Depression.