Mortgage rates hit the lowest levels of the year this week. Shouldn't the housing market have good news by low rates? 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 plummeted following the home buyer tax credit deadline April 30. Plus, numerous of the different homeowners are still out of work, more than 1 million more foreclosures are expected to occur and banks still have yet to put the homes they’ve already seized on the market. The housing market recovery will have to wait. In fact, the U.S. housing market may have yet to bottom out.
Source for this article: 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, which is actually down from 4.79 percent last week, as outlined by mortgage finance company Freddie Mac. It was just above the record of 4.71 set last December. All of the mortgage rate trends point even lower than that. 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 since August 1991. Sadly, the US housing market isn't responding. As outlined by 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 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.
Forecast of mortgage rate
The mortgage rate forecast will create an economic setback. A jobs report 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. According to the Los Angeles Times, investors have rushed to buy 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 Wednesday, despite the fact that they’re 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.
2010 Housing market predictions
With mortgage rates at near record lows, last week the number of customers applying for a mortgage to buy a property fell to the lowest level that it has been in 13 years and was down 35 percent from a month ago, according to 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 what we call foreclosed homes not on the market yet. You will find some homeowners who haven't foreclosed yet. Analysts expect foreclosures to peak later this year or next at about 2 million.
Housing market recovery on hold
Sidelined sellers are people who want to sell their homes but are waiting for the housing market recovery. According to MarketWatch, about 7 percent of homeowners — representing a lot 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 aren’t only worried about getting a home, but also their ability to keep it. Chief economist at Fannie Mae told MarketWatch that within the long run, that attitude is a good thing for the economy.
We're finally getting good news.
Read a lot more on this topic here
Associated Press
google.com/hostednews/ap/article/ALeqM5hPHFMSZDHZNqzg3uDQ1tvmGdoq4wD9G8FSG00
LA 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
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