Mortgage Rates Drop as Unemployment Rises

According to Freddie Mac, the average rate on a 30 year fixed rate mortgage, as reported on Nov. 12, is now at 4.83%, perilously close to the all time low of 4.71% set back in April of this year.

For those who can afford higher payments, a 15 year fixed rate mortgages now average 4.32%, which is the lowest on record.  It was only 1 year ago that 30 year fixed rate mortgages averaged 6.04% and the 15 year fixed rate stood at 5.73%.  The low rates have not given the housing market the boost it needed.  New home starts fell 10.7% from September to October which also included a 33% drop in building starts for condominiums and apartments buildings.  This is the lowest pace on record since 1959.

Despite low interest rates, applications to buy homes sank last week to a 12 year low, according to the Mortgage Bankers Association.  Now that the $8,000 first time home buyer tax credit has been extended, with loan closings required by June 30, 2010, and expanded to include a $6,500 tax credit for existing owners buying a new house experts believe the housing market will get a “jump start”.

Bob Moulton, president of Americana Mortgage Group, says, “rates are low enough to get things jump started, winter time is historically quiet but with prices down and rates at a record low we might see more activity this winter”.

This is unlikely as we see unemployment still rising, currently at 17.5% nationwide according to Tribbleagency.com, who says the government should be measuring these rates by the U-6 standard not the current U-3 standard.  The U-6 standard is closer to the measurement used in the depression and gives a much more accurate picture of the current state of unemployment.

Related posts:

1. 30 Year Rates Drop Below 6 %
2. Federal Reserve Move Lowers Mortgage Rates Below 5%
3. Freddie Mac Chief Says Mortgage Rates Near Bottom
4. Mortgage Rates Rise as Foreclosures Increase
5. Pending Home Sales Drop, Market Looks Bleak

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