US mortgages drop to record lows

[arnieH]

For the second week in a row, the housing market has seen record low home loan rates. Slower than expected economic progress is to blame for the lows, states Freddie Mac. Source of article: Mortgage rates reach record lows -- again



Almost all rates record low



According to Freddie Mac’s weekly Primary Mortgage Market Survey, 30-year fixed rate mortgages averaged 3.87 percent for the week ending Thursday, Feb.2. That is a drop from last week’s 3.98 percent and a serious fall from 2011's 4.81 percent. Meanwhile, the 15-year fixed rate mortgage averaged 3.14 percent, dropping from 3.24 percent last week and 4.08 percent a year ago.



This is the lowest the rates have been since 1970. That was the yea Freddie Mac started.



[Fixing it up to sell? How about a home repair loan with no hassle]



GDP growth from Freddie Mac



Frank Nothaft is the chief economist and vice president of Freddie Mac. He said:



“Most mortgage rates eased to all-time record lows this week as fourth quarter growth in the economy fell short of market projections.”



The nation’s Gross Domestic Product grew by 2.8 percent in last year’s final quarter, Nothaft elaborated; that is below the expectations of economists.



Trying out optimism



Some improvement was shown. Nothaft said:



“One bright spot, however, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent.”



Some progress was seen though. The one-year Treasury-indexed adjustable-rate mortgage increased from last week’s 2.74 percent to this week’s 2.76 percent. Last year it was 3.26 percent though.



Another study to consider



The dip has been blamed on the Federal Reserve and Ben Bernanke by Bankrate.com. The business did another mortgage survey and got the same results.



Bankrate.com said in a press release:



“The pledge to keep short-term interest rates on hold until late 2014 was the catalyst for this week’s move and will also help keep a lid on mortgage rates for the foreseeable future.”



The Federal Reserve announced that it intends to keep rates of interest low until 2014. It said this was because of the slow global economy and domestic labor industry.



Bankrate.com’s press release also called the low rates “fortuitously timed” in the light of the Obama administration’s newest refinancing program.



During a visit to a Northern VA community center Wed, Obama outlined a program whereby homeowners with privately held mortgages can have a chance at refinancing into loans backed by the FHA. The homeowners would then be able to take advantage of the record low rates of interest. The plan has not yet been approved by Congress.



Sources



CBS

Market Watch

CNN