Mortgage rates still near record lows

Mortgage rates still near record lows

The Federal Savings Bank

November, 2012

Those who are interested in making a new home purchase might be encouraged to know that the mortgage rates have settled near record lows and now is a better time than ever to take advantage of the housing market.

Freddie Mac recently released the results of its Primary Mortgage Market Survey, which showed fixed mortgage rates continue to hover near record lows and have been there over the past six weeks. Last year, the 30-year fixed-rate mortgage averaged 3.99 percent, dropping below 4.00 percent for the first time since 1971, when Freddie Mac first began reporting its weekly mortgage rates survey.

The 15-year fixed-rate mortgage this week also averaged 2.69 percent with an average 0.7 point, a decrease from the previous week when it averaged 2.70. The 15-year fixed-rate mortgage last year at the same time was reported at an average of 3.30 percent.

"Mortgage rates remained near record lows following the employment report for October," said Frank Nothaft, vice president and chief economist of Freddie Mac. "The economy added 171,000 jobs, above the market consensus forecast, and the two prior months were revised up a combined 84,000. The Labor Department also reported that the unemployment rate ticked up to 7.9 percent and that average hourly wages were unchanged."

While mortgage rates are still hovering near record lows, metro area home prices have continued to show strength, recovering from the downturn that was experienced during the recession.

According to the latest quarterly report from the National Association of Realtors, growth in metro area median home prices increased in the third quarter of the year. The median existing single-family home price increased in 120 out of 149 metro statistical areas based on closing in the third quarter compared to numbers reported at the same time in 2011.

Lawrence Yun, NAR's chief economist, reported that housing inventories have continued to decrease from a record that was set in the summer of 2007. He added that his organization expects normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to increase supply in order to meet demands.

The improvement in the housing market could be a result of unemployment numbers being under 8 percent for the first time in nearly four years, currently standing at 7.9 percent, according to the U.S. Bureau of Labor Statistics.

Tagged As: First Time Home Buyers