Fixed Mortgage Rates Fall to Record 3.89 Percent
Fixed mortgage rates reached a record low Thursday as the 10-year Treasury note fell below two percent. According to the Associated Press, Freddie Mac reported that the 30-year fixed mortgage rate fell to 3.89 percent and the 15-year rate bottomed out at 3.16 percent.
Such low rates haven’t been seen since the federal government began tracking mortgages in the 1950s.
Still, the AP noted that the new rates will have little effect on the large number of Americans still unable to afford a home. With unemployment high and wage gains low, many people can’t qualify for home loans and others don’t want to risk buying a home that will lose value over time. Mortgage applications themselves have fallen over the last four weeks, the Mortgage Bankers Association said.
And even as rates plunge, new home sales continue to be dismal. Freddie Mac’s chief economist, Frank Nothaft, said that 2011 will likely be the worst year for new home sales in half a century. Even sales of previously occupied homes barely inched up from the low pace set in 2010. Until hiring picks up and unemployment drops, Nothaft said, home sales will continue to be low.
But builders still hold out hope that 2012 will be a brighter year. The National Association of Home Builders pointed to a December survey that identified low mortgage rates as the largest factor in improving builder sentiment.