Mortgage rates hit the lowest levels of the year this week. 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 the attractive mortgage rates, mortgage applications plummeted after the home buyer tax credit deadline April 30. Plus, many of the different homeowners are nevertheless out of work, a lot more than 1 million more foreclosures are expected to occur and banks nevertheless have yet to put the homes they’ve already seized on the market. The housing market recovery will have to wait. The market might still get worse.
Mortgage rate trends
The average mortgage rate dropped to 4.72 percent this week, which is actually down from 4.79 percent last week, according to mortgage finance company Freddie Mac. It was above what was set last December in 4.71. Mortgage rate trends were 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 given that August 1991. But the U.S. housing market is not responding. The Associated Press reports 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 designed to rise following the program ended this spring, but have fallen instead over the past two months.
The mortgage rate forecast
The mortgage rate forecast will create an economic setback. A jobs report released last week has showed us that private sector hiring was practically non-existent at 41,000 jobs. Investors worried a lot about the stock market shifted money into the safety of U.S. Treasury bonds. According to the Los Angeles Times, investors have rushed to purchase Treasury securities given that late April, within 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’re paying just 3.20 percent. That has certainly pushed down the yield on US treasury debt. That yield is tracked by the mortgage rate forecast.
Housing market predictions 2010
With mortgage rates at near record lows, the number of customers applying for a mortgage to purchase 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. As outlined by MarketWatch, 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 foreclosed homes banks are holding that haven’t hit the market yet. There are also severely delinquent homeowners who have not entered foreclosure yet. At about 2 million, analysts think foreclosures will peak later his year or next.
On hold is housing market recovery
Sidelined sellers are people who want to sell their homes but are waiting for the housing market recovery before trying. MarketWatch reports that about 7 percent of homeowners — representing a lot more than 5 million homes — fall into this category. They will have to wait 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 of more than 2,000 consumers, 49 percent said that if they ever tried to purchase a home they’d never be able to conserve enough money for a down payment. People underwater on their mortgages, which is about 25 percent of borrowers, can’t get the financing to move to an additional house. Individuals who are buying for mortgages aren’t only worried about getting a home, but additionally want to be able to keep it. Chief economist at Fannie Mae told MarketWatch that in the long run, that attitude is a good thing for the economy.
Finally we are getting 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
