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Low Mortgage Rates have yet to Fuel Home Sales

Tips & Trends

From Rory S. Coakley on some of the latest real estate news and happenings.

Mortgage rates for 30-year fixed loans were unchanged this week at the lowest point in decades, but it hasn’t been enough to jump-start the housing market.

Government-sponsored mortgage buyer Freddie Mac said Thursday that the average 30-year fixed rate was 4.57 percent. That’s the same as a week earlier, and the lowest since Freddie Mac began tracking rates in 1971.

The last time home loan rates were lower was the 1950s, when most mortgages lasted 20 or 25 years.

Rates on 15-year fixed-rate mortgages decreased to an average of 4.06 percent, down from 4.07 percent last week. Rates on five-year adjustable-rate mortgages averaged 3.85 percent, up from 3.75 percent.

Rates on one-year ARMs fell to an average of 3.74 percent from 3.75 percent. This week’s average is the lowest the one-year ARM has been since Freddie Mac began following it in 1984.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac’s survey averaged 0.7 points.

Rates have fallen since the spring. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on U.S. debt.

But low rates have yet to fuel home sales and have sparked only a modest increase in refinancing.

Mortgage applications dropped last week as requests for purchase financing declined 3.1 percent to the lowest level in more than 13 years, the Mortgage Bankers Association said Wednesday. An index measuring refinancing fell 2.9 percent, the MBA said.

Rates could go lower and still not budge the housing market, analysts say. That’s because a person without a job can’t afford a home; a person worried about losing a job is unlikely to buy one, either.

To calculate the national average, Freddie Mac collects mortgage rates Monday through Wednesday from lenders around the country. Rates often fluctuate significantly, even within a given day.


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