Mortgage rates near record lows - housing market not responding

Mortgage rates hit the lowest levels of the year this week. Very low mortgage rates should be good news for U.S. housing market predictions 2010, shouldn’t they? Existing home prices and existing home sales were up in April — an additional bit of good news, right? But despite the attractive mortgage rates, mortgage applications went down quite a bit after the home buyer tax credit deadline April 30. Plus, many homeowners are nevertheless out of work, a lot more than 1 million a lot 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 get worse nevertheless.

Article Source: Mortgage rates near record lows – housing market not responding

All of the mortgage rate trends

The average mortgage rate dropped to 4.72 percent this week, down from 4.79 percent last week, as outlined by mortgage finance company Freddie Mac The average mortgage rate dropped by around 4.72 percent this week, down from 4.79 percent last week, as outlined by mortgage finance business Freddie Mac . It was above what was set last December in 4.71. Mortgage rate trends point even lower. 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 still isn't responding. It was reported by the Associated Press that 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 that was done 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 following the program ended, but ha! ve fallen drastically instead over the past two months.

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 to the safety of U.S. Treasury bonds. It was reported by the Los Angeles Times that investors have rushed to buy Treasury securities since late April, in 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, although they are paying just 3.20 percent. The yield on US treasury has been pushed down by it. The mortgage rate forecast tracks that yield.

Predictions of the housing market 2010

With mortgage rates at near record lows, the number of customers that are applying for a mortgage 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. It was reported by MarketWatch that any housing market recovery will likely continue to be slowed by additional homes on the market from “shadow inventory” and “sidelined sellers.” Shadow inventory is what we call foreclosed homes not on the market yet. 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 people who want to sell their homes but are waiting for the housing market recovery. MarketWatch reports that about 7 percent of homeowners — representing more than 5 million homes — fall into this category. They will likely be waiting for a while. In May the US unemployment rate was 9.7 percent. Numerous salaries are cut or frozen. In a National Foundation for Credit Counseling survey, 49 percent said if they tried to purchase a home they’d never be able to conserve enough money for a down payment. Individuals underwater on their mortgages, which is about 25 percent of borrowers, can’t get the financing to move to another 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 in the long run, that attitude is a good thing for the economy.

Finally, some good news.

Citations

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