Housing market not responding – mortgage rates near record lows

This week the mortgage market hit the lowest levels. Shouldn't low mortgage rates be good news for the housing market? Shouldn't it be better news also when thinking about how sales were up in April? But despite the attractive mortgage rates, mortgage applications went down quite a bit after the home buyer tax credit deadline April 30. Plus, numerous homeowners are nevertheless out of work, more than 1 million more foreclosures are likely to occur and banks nevertheless have yet to put the homes they’ve already taken back on the market. The housing market recovery could have to wait. The market might still get worse.

Article Source: Mortgage rates near record lows – housing market not responding By Personal Money Store

Trends in mortgage rates

The average mortgage rate dropped to 4.72 percent this week, down from 4.79 percent last week, according to mortgage finance company Freddie Mac The average mortgage rate dropped by around 4.72 percent this week, down from 4.79 percent last week, according to mortgage finance company Freddie Mac . It was above what was set last December in 4.71. All of the mortgage rate trends point even lower than that. The average rate on a 15-year fixed-rate mortgage hit 4.17 percent, down from 4.2 percent last week and also the lowest on record given that August 1991. The US housing market nevertheless isn't responding. The Associated Press reports the market is struggling without a tax credit of up to $8,000 for first-time buyers, which expired at the end of April. A campaign by the Federal Reserve to cut back borrowing costs for consumers pushed mortgage rate trends down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring, but h! ave fallen instead over the past two months.

The mortgage rate forecast

The mortgage rate forecast will create an economic setback. A jobs report that was released last week showed that private sector hiring was practically non-existent at 41,000 jobs. Investors worried about the stock market shifted money into the safety of U.S. Treasury bonds. It was reported by the Los Angeles Times that investors have rushed to purchase Treasury securities since late April, within the process driving market yields on the bonds sharply lower. Investors bought $21 billion of the securities at a Treasury auction that occurred on Wednesday, despite the fact that they are paying just 3.20 percent. That has surely pushed down the yield on US treasury debt. The mortgage rate forecast tends to track that yield.

Predictions of the housing market 2010

With mortgage rates at near record lows, the number of customers applying for a mortgage to buy a property fell to the lowest level in 13 years last week and was down 35 percent from a month ago, as outlined by the Mortgage Bankers Association. As outlined by MarketWatch, any housing market recovery will likely continue to be slowed by additional homes on the market from “shadow inventory” and “sidelined sellers.” We called foreclosed homes not yet on the market shadow inventory. There are also severely delinquent homeowners who have not entered foreclosure yet. This year or next, it is expected that foreclosures will peak.

Housing market recovery on hold

Sidelined sellers are individuals who want to sell their homes but are waiting for the housing market recovery before trying. It was reported by MarketWatch that about 7 percent of homeowners — representing more than 5 million homes — fall into this category. They may have to wait for a while. In May the US unemployment rate was 9.7 percent. Numerous of the salaries are frozen or cut. In a National Foundation for Credit Counseling survey of a lot more than 2,000 consumers, 49 percent said if they tried to purchase a home they’d never be able to conserve enough money for a down payment. People underwater on their mortgages, about 25 percent of borrowers, can’t get the financing to move to any other kind of house. People who are purchasing for mortgages aren’t only worried about getting a home, but additionally their ability to keep it. Doug Duncan, chief economist at Fannie Mae, told MarketWatch that within the long run, that attitude is a goo! d thing for the economy.

We're finally getting good news.

Additional details at these websites

Associated Press
google.com/hostednews/ap/article/ALeqM5hPHFMSZDHZNqzg3uDQ1tvmGdoq4wD9G8FSG00
Los Angeles times
latimesblogs.latimes.com/money_co/2010/06/treasury-bonds-yields-rally-economy-auction-austerity-pimco-gross.html
Marketwatch.com
marketwatch.com/story/the-housing-market-recession-is-not-over-2010-06-09?pagenumber=1