Mortgage Rates Sink to Lowest Level on Record
A helicopter flies over as High Park fire burns on Stove Prairie Road and Highway 14 in Poudre Canyon, as seen from Glacier View Meadows, west of Fort Collins, Colo. on Tuesday, June 12, 2012. The fire has now burned more than 40,000 acres encompassing more than 65 square miles. (AP Photo/The Denver Post, Aaron Ontiveroz) MAGS OUT; TV OUT; INTERNET OUT / Aaron Ontiveroz
Mortgages are cheaper today than they've been in a half-century. If only most people had the job security, the credit score and the cash to qualify.
The average rate for a 30-year fixed loan sank to 4.69 percent this week, beating the low set in December and down from 4.75 percent last week, Freddie Mac said Thursday. Rates for 15-year and five-year mortgages also hit lows.
Rates are at their lowest since the mortgage company began keeping records in 1971. The last time they were any cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.
Almost no one expects falling rates to energize the economy, though. Sales of new homes collapsed in May after an enticing tax credit expired.
"As long as prospective homebuyers are still concerned about their jobs and financial well-being, many will be reluctant to take the plunge, even though affordability has never been better," said Greg McBride, senior financial analyst with Bankrate.com.
Rates have fallen over the past two months as investors have become nervous about Europe's debt crisis and the global economy and have shifted money into safe Treasury bonds. The demand has caused Treasury yields to fall. Mortgage rates track those yields.
While mortgages are getting cheaper, low interest rates hurt Americans who are trying to save. Puny rates for savings accounts and CDs are especially hard on people who are living on fixed incomes and earning next to nothing on their money.
Americans normally rush to refinance when rates plummet. But refinancing activity now amounts to less than half the level of early 2009, when long-term rates hovered around 5 percent, according to the Mortgage Bankers Association.
Besides, many people who want to refinance - and are able to - have already done it, said Michael Fratantoni, vice president of research and economics at the trade group. And refinancing costs can total several thousand dollars.
"Rates haven't dropped low enough to justify a second refinancing," Fratantoni said. "The group of people who could potentially benefit is much smaller than it was 15 months ago."
Another factor: Many Americans owe more on their mortgages than their homes are worth and can't refinance through the usual channels. The Obama administration has launched programs to help borrowers refinance if they owe up to 25 percent more than their home's value and have their loans guaranteed by mortgage giants Freddie Mac or Fannie Mae.
About 291,000 homeowners have participated as of March - a small fraction of the estimated 15 million homeowners who are "underwater" on their mortgages. And in Nevada and Florida, where home prices have fallen 50 percent or more from their highs, neither record-low rates nor government help can rescue homeowners.
"It's not the desire to refinance. It's the ability to refinance," said Chris Brown, a loan officer with Trinity Mortgage Co. in Orlando, Fla.
Refinancing is generally considered worthwhile for homeowners who can shave at least three-quarters of a percentage point off the rates they pay now and plan to stay in their homes for a long time.
Besides the fees for the mortgage broker or lender, there are fees for title insurance, a new appraisal, document processing and other charges. And in "no fee" mortgages, costs are often added to the loan amount or the interest rate is higher.
To figure the national average, Freddie Mac collects mortgage rates each Monday through Wednesday from lenders around the country. Rates often fluctuate, even within a given day.
Rates on 15-year fixed-rate mortgages fell to an average of 4.13 percent. That was the lowest since at least 1991 and down from 4.2 percent a week earlier.
Rates on five-year adjustable-rate mortgages averaged 3.84 percent, down from 3.89 percent a week earlier. That was also the lowest on Freddie Mac's records, which date to January 2005 for those
© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The average rate for a 30-year fixed loan sank to 4.69 percent this week, beating the low set in December and down from 4.75 percent last week, Freddie Mac said Thursday. Rates for 15-year and five-year mortgages also hit lows.
Rates are at their lowest since the mortgage company began keeping records in 1971. The last time they were any cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.
Almost no one expects falling rates to energize the economy, though. Sales of new homes collapsed in May after an enticing tax credit expired.
"As long as prospective homebuyers are still concerned about their jobs and financial well-being, many will be reluctant to take the plunge, even though affordability has never been better," said Greg McBride, senior financial analyst with Bankrate.com.
Rates have fallen over the past two months as investors have become nervous about Europe's debt crisis and the global economy and have shifted money into safe Treasury bonds. The demand has caused Treasury yields to fall. Mortgage rates track those yields.
While mortgages are getting cheaper, low interest rates hurt Americans who are trying to save. Puny rates for savings accounts and CDs are especially hard on people who are living on fixed incomes and earning next to nothing on their money.
Americans normally rush to refinance when rates plummet. But refinancing activity now amounts to less than half the level of early 2009, when long-term rates hovered around 5 percent, according to the Mortgage Bankers Association.
Besides, many people who want to refinance - and are able to - have already done it, said Michael Fratantoni, vice president of research and economics at the trade group. And refinancing costs can total several thousand dollars.
"Rates haven't dropped low enough to justify a second refinancing," Fratantoni said. "The group of people who could potentially benefit is much smaller than it was 15 months ago."
Another factor: Many Americans owe more on their mortgages than their homes are worth and can't refinance through the usual channels. The Obama administration has launched programs to help borrowers refinance if they owe up to 25 percent more than their home's value and have their loans guaranteed by mortgage giants Freddie Mac or Fannie Mae.
About 291,000 homeowners have participated as of March - a small fraction of the estimated 15 million homeowners who are "underwater" on their mortgages. And in Nevada and Florida, where home prices have fallen 50 percent or more from their highs, neither record-low rates nor government help can rescue homeowners.
"It's not the desire to refinance. It's the ability to refinance," said Chris Brown, a loan officer with Trinity Mortgage Co. in Orlando, Fla.
Refinancing is generally considered worthwhile for homeowners who can shave at least three-quarters of a percentage point off the rates they pay now and plan to stay in their homes for a long time.
Besides the fees for the mortgage broker or lender, there are fees for title insurance, a new appraisal, document processing and other charges. And in "no fee" mortgages, costs are often added to the loan amount or the interest rate is higher.
To figure the national average, Freddie Mac collects mortgage rates each Monday through Wednesday from lenders around the country. Rates often fluctuate, even within a given day.
Rates on 15-year fixed-rate mortgages fell to an average of 4.13 percent. That was the lowest since at least 1991 and down from 4.2 percent a week earlier.
Rates on five-year adjustable-rate mortgages averaged 3.84 percent, down from 3.89 percent a week earlier. That was also the lowest on Freddie Mac's records, which date to January 2005 for those
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Even with good credit.... I just had to pay 6.5 to get it and it was for only 50% of value
True!
They'd love to raise the rates to stave off inflation but the gov't desperately needs money, and the banks don't want to end up in the real estate business.
Do you know the difference between private and government? Oh, that is right, the numbers do not jive with your ideology, but don't let that stop you from posting poorly written variations on this theme.
Our current debt disparity resembles the Great Depression for a reason; our economy has been running on Bubble fumes for 30 years. I guess Obama's birth ushered in all these awful conditions? The Earth shuddered when his mothers water broke.
America could use less people like you, Chimp. I propose an illegal exchange program, 20 idiots like you should equate to the worth of one immigrant. Come to think of it, you have a negative value, maybe you should also surrender anything of value you have in an attempt to reach zero, then we can start the exchange process.
Here's what we need to do. This isn't a solution, it's a start.
1. Demand enforcement of immigration laws. No fence no profiling. Just have da Fuzz "Check the books" on any and all employers randomly and frequently. If they are hesitant, go to Jury Duty and nullify crimes, such as any crime against an illegal, save that by employers and traffickers. Or a cop who refuses to chase them even when they run behind him as he writes people tickets.
2. Demand a stop to "Tax breaks and subsidies" for companies that export jobs. Demand tariffs and trade barriers, like every other country in the world especially China.
3. Enforce "Monopoly" laws to break up "Big Media". A "Monopoly" is not 100% of the game, it's enough to influence supply and demand beyond the market itself.
Our problem is that our rich elite have 15 mansions and 25 yachts and want more even if they'll take the food out of our mouths to get it. It's time to ask "What does man really need?" Not necessarily "Communism" but start talking about it seriously, they'll scale back in blind panic like they did after the depression. (and their treason the "Business Plot" look it up, was uncovered)