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30-year mortgage rates hit another low

How low can they go? Freddie Mac reported this morning that average rates on a 30-year fixed mortgage sank to 4.58 percent, blowing past last week's record low of 4.69 percent by 11 basis points.

Rates on 15-year fixed loans hit a new record, 4.04 percent. Rates on 5/1 hybrids fell to a new record of 3.79, virtually equal to the average rate on a 1-year ARM at 3.8 percent. Only the 1-year ARM failed to set a record this week.

Freddie Mac chief economist Frank Nothaft said in a press release that we're in "a period when the economy struggles to gain momentum and inflation remains very low."

Our little Weekend Poll is unscientific and statistically insignificant. But with that grain of salt duly noted, it's interesting to check your responses to the June 25 poll, which asked how long mortgage rates would remain low. Here's the breakdown:

37 percent: Rates will go even lower.
35 percent: Rates will stay low through the rest of the year.
17 percent: Rates won't stay low for long; inflation is coming back.
10 percent: Rates will stay low well into next year.

Meanwhile, news just out from the National Association of Realtors is hardly encouraging. Pending home sales, based on homes going under contract in May, fell 30 percent from April and were 15.9 percent below a year ago.

Of course May was the first month without the federal home-buyer tax credit. And the month got off to an unsettling start with the Flash Crash on Wall Street. Even though a prospective home buyer's down payment money should never be tied up in the stock market, Wall Street drama doesn't exactly prompt people to declare, "Honey, let's buy a house!"

What do you think is going on? Are other factors more important than low mortgage rates now? And how long might the post-tax-credit funk last in the housing market?

By Elizabeth Razzi  |  July 1, 2010; 11:34 AM ET
Categories:  Buying , Statistics , The economy , The market , Weekend Poll  
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Next: The Weekend Poll: Who has it made in the shade?

Comments

Seems to me it's basic supply and demand -- no one's buying houses, and folks who own homes have lost value and so frequently don't meet the stringent new criteria for refinancing. No demand for mortgages + slow economy with fewer capital demands overall = lower prices.

We're trying to jump on this, believe me -- we have a 1st mortgage (at what was a great rate at the time!) and a HELOC that we used to redo our kitchen, and the current rates would allow us to consolidate both loans into a single 15-year mortgage with the SAME payment. So basically, pay the same amount we're paying now, but get everything paid off almost 10 years sooner. WOW!! Oh, and I guess I should mention: 800+ credit scores, zero other debt, and current loans at something like half of the debt-to-income ratio. We're about as well-qualified as they come.

But, surprise, we're having trouble finding a loan. We're in the "conforming jumbo" category, which cuts out a lot of loans. And because there are two loans involved, we've been told it's a cash-out refi, which maxes out at 60% LTV. We did find one lender that thinks it can do the loan, so we have our fingers crossed -- but we still are going to have to fork over $400 for an appraisal and hope that it comes through at the 80% LTV bare minimum we need for ANY loan -- and that the underwriter doesn't suddenly decide that it is a cash-out refi after all.

So, yeah, loans look cheap. But when no one's buying houses, and when even well-qualified borrowers can't get approved to refi, well, that kind of cuts your demand, doesn't it?

Posted by: laura33 | July 1, 2010 2:31 PM | Report abuse

Seems to me it's basic supply and demand -- no one's buying houses, and folks who own homes have lost value and so frequently don't meet the stringent new criteria for refinancing. No demand for mortgages + slow economy with fewer capital demands overall = lower prices.
-----------------------------------------
Forget all the demand-supply economics ... they are no use in the economic downward spiral the US finds itself in today ... we're deflating that's pretty much it -- the 10 Year T-Note is dropping and it will keep dropping if deflation takes hold [the next lost decade for the US is forming right in front of our eyes] -- the mortgage rates which are tied to the 10-Year will keep dropping as well ... demand and supply have nothing to do - investors don't see any prospect for inflation --- the path the US is going down is not looking pleasant and we can thank all the Real-Estate Guru's for this wonderful gift!

Posted by: free_np | July 1, 2010 2:54 PM | Report abuse

The only consolation is that many of the weasels from the mortgage industry are out of work. But probably many went into the PayDay lending business ... which is booming.

Posted by: cautious | July 2, 2010 5:51 AM | Report abuse

The economic collapse was driven in part by people ending up in homes they were completely unable to afford. In response loan requirements have tightened, reducing the pool of people who qualify, thus home sales will also shrink. Now you have to be better financially able to take on the financial responsibility of owning a home. Isn't this what was was needed?

Posted by: washpost18 | July 2, 2010 7:14 AM | Report abuse

Buy now, it ain't stayin' this low!

Posted by: kls1 | July 2, 2010 3:52 PM | Report abuse

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