So far, drop fails to trigger boom
WASHINGTON — Mortgage rates fell this week to the lowest level on records dating to 1971, giving consumers added incentive to lock in low payments for home purchases and refinanced loans.
Tweet Be the first to Tweet this!Submit to DiggdiggsdiggYahoo! Buzz ShareThis The average rate for 30-year fixed loans sank to 4.69 percent, from 4.75 percent last week, mortgage company Freddie Mac said yesterday.
That’s the lowest point since Freddie Mac began tracking rates in April 1971. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.
Mortgage rates have fallen over the past two months as nervous investors have shifted money into the safety of Treasury bonds.
Yet the falling rates have yet to spark a home-buying boom — or energize the economy. Sales of new homes collapsed in May after home-buyer tax credits expired. The economy also remains under pressure from high unemployment. And many people don’t qualify for mortgages under tightened lending rules.
“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.
Low rates throughout the economy also hurt one group of Americans: savers. Puny rates are especially hard on people living on fixed incomes who are earning next to nothing on their savings.
Lending activity remains sluggish. Mortgage application volume dipped 6 percent last week from a week earlier, according to the Mortgage Bankers Association. Refinancing activity fell 7 percent. And mortgage applications to buy homes slipped 1.2 percent.
Many Americans owe more on their mortgages than their homes are worth — often called “under water’’ — and can’t refinance.
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 loans owned or guaranteed by mortgage giants Freddie Mac or Fannie Mae.
Associated Press June 26, 2010