Mortgage rates near record lows - housing market not responding

This week the mortgage market hit the lowest levels. Shouldn't low mortgage rates be good news for the housing market? Shouldn't it be good news that sales were up in April too? But despite the attractive mortgage rates, mortgage applications plummeted after the home buyer tax credit deadline April 30. Plus, numerous homeowners are nevertheless out of work, a lot more than 1 million more foreclosures are probably going to occur and banks nevertheless have yet to put the homes they’ve already taken back on the market. The housing market recovery may have to wait. The market might still get worse.

Article Source: Mortgage rates near record lows – housing market not responding By Personal Money Store

Trends in mortgage rates

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 business Freddie Mac. It was above what was set last December in 4.71. 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, which appears to be down from 4.2 percent last week and the lowest on record since August 1991. The US housing market nevertheless isn't 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 intended to rise following the program ended this spring, but have fallen instead over the past two months.

Mortgage rate forecast

An economic setback could be created by the mortgage rate forecast. 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 into the safety of U.S. Treasury bonds. It was reported by the LA Times that investors have rushed to buy Treasury securities given that late April, in the process driving market yields on the bonds sharply lower. Investors bought $21 billion of the securities at a Treasury auction Wednesday, even though they’re paying around 3.20 percent of it. That demand has pushed down the yield on U.S. Treasury debt. That yield is tracked by the mortgage rate forecast.

Predictions of the housing market 2010

With mortgage rates at near record lows, the number of customers that are applying for a mortgage fell to the lowest level in 13 years last week and was down 35 percent from a month ago, according to the Mortgage Bankers Association. MarketWatch reports that 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 have not 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.

Recovery of housing market seems on hold

Sidelined sellers are individuals who want to sell their homes but are waiting for the housing market recovery. It was reported by MarketWatch that about 7 percent of homeowners — representing a lot more than 5 million homes — fall into this category. They’ll wait a while. 9.7 percent was the US unemployment rate in May. Salaries are being frozen, or cut. In a National Foundation for Credit Counseling survey of a lot more than 2,000 consumers, 49 percent said if they tried to purchase 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 any other kind of house. People who are shopping for mortgages aren’t only worried about getting a home, but additionally their ability to keep it. Doug Duncan, 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.

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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