Lower Mortgage Quotes Don’t Boost US Housing Market
Easing mortgage rates this week failed to give the beleaguered housing market a boost as potential buyers continue to sit on the sidelines, lacking the confidence to come to the closing table.
Earlier Thursday,
The Northeast came in with the highest average, 6.11% with the same point average. The Southwest’s 5.99%, with a 0.7 point - what is paid to buy down the mortgage rate - was the lowest. Fifteen-year fixed, meanwhile, averaged 5.72%, with an average 0.6 point, down from last week’s 6.14% and last year’s 5.99%.
The rates fell “amid news of tame inflation and a weaker housing market,” noted Frank Nothaft,
The trend could continue. With 10-year treasury yields down and the credit market beginning to thaw, rates should slip below 6% by this time next week, said Mark Zandi, chief economist of Moody’s Economy.com.
“There are many other problems the housing market is struggling with and these lower rates aren’t going to win the day, but at least they help,” he said, adding that 6% is a psychological “benchmark.”
Even though better rates could help lure buyers into the market - lower rates mean a cheaper payment andhelp with refinancing - the news did little to ease the frazzled market. Shares of Freddie, which has plunged 98% year-to-date, fell nearly 9% to
Even if rates drop again next week, consumers still face the same problems. Scores of lenders are now out of business.
The crisis spread to Wall Street, and job losses are mounting: The Wall Street Journal reported that
That, combined with falling home prices, is adding to a foreclosure glut. Earlier Thursday, RealtyTrac said that third-quarter foreclosure filings - default notices, auction sale notices and bank repossessions - soared 71% from a year earlier. Last month, filings were recorded on one out of every 475 housing units last month.
While buyers are snapping up bargain-priced foreclosures - some selling below replacement cost - mortgage applications filed last week decreased a seasonally adjusted 16.6% from the week earlier, the Mortgage Bankers Association said recently. Weekly application volume hasn’t been lower since the end of 2000.
As it announced the lower average mortgage,
“In short, it’s a tough market that just got more difficult with the current uncertainties,” said
But one mortgage broker thinks the presidential election will help calm the ” fence sitters,” or people who need to buy a house, but are waiting as prices and rates fall.
“We will see a return probably relatively quickly to normalcy after
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