Mortgage rates near record lows - housing market not responding

Mortgage rates hit the lowest levels of the year this week — almost too record lows. Shouldn't the housing market have good news by low rates? Shouldn't it be better news also when thinking about how sales were up in April? But despite all of the attractive mortgage rates, mortgage applications plummeted following the home buyer tax credit deadline April 30. Plus, many homeowners are still out of work, a lot more than 1 million more foreclosures are likely to occur and banks still have yet to put the homes they’ve already taken back on the market. The recovery of the housing market can have to wait. The market might nevertheless get worse.

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

Mortgage rate trends

The average mortgage rate dropped to 4.72 percent this week, down from 4.79 percent last week, according to mortgage finance business 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 . Last December it was above the record 4.71. Mortgage rate trends point even lower. The average rate on a 15-year fixed-rate mortgage hit somewhere around 4.17 percent, down from 4.2 percent last week and the lowest on record since August 1991. The US housing market still isn't responding. According to the Associated Press, 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 lower borrowing costs for consumers pushed mortgage rate trends down to extraordinarily low levels last year. Rates were expected to rise following the program ended this spring, but have fallen inst! ead over the past two months.

The mortgage rate forecast

The mortgage rate forecast is subject to a domino effect of economic setbacks. A jobs report released last week showed that private sector hiring was practically non-existent at 41,000 jobs. Investors worried quite a bit about the stock market shifted money to the safety of U.S. Treasury bonds. It was reported by the LA 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, despite the fact that they are paying just 3.20 percent. The yield on US treasury has been pushed down by it. The mortgage rate forecast tends to track that yield.

Housing market predictions 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. MarketWatch reports that 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. You will find some homeowners who haven't foreclosed yet. At about 2 million, analysts think foreclosures will peak later his year or next.

Recovery of housing market seems on hold

Sidelined sellers are individuals 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. 9.7 percent was the US unemployment rate in May. Many of the salaries are frozen or cut. In a National Foundation for Credit Counseling survey, 49 percent said if they tried to buy a home they’d never be able to save enough money for a down payment. People underwater on their mortgages, about 25 percent of borrowers, can’t get the financing to move to another house. People who are buying for mortgages are not only worried about getting a home, but additionally their ability to keep it. Doug Duncan, who’s the chief economist at Fannie Mae, told MarketWatch that in the long run, that attitude is a good thing for the economy.

We're finally getting good news.

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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