Low, low, low
According to the National Association of Realtors, the 3.5% decline in existing home sales is due in large part to contract cancellations from declined mortgage applications or because of appraised values coming in below the negotiated price, halting the contract.
The bright spot, however, in housing is that despite cancellations and difficult lending, mortgage rates have hit their lowest level in over 50 years.
Freddie Mac’s primary mortgage market survey this week shows 30-year fixed rate mortgages averaging 4.15%, 15-year fixed rate mortgages average 3.36%, 5/1-year adjustable rate mortgages average 3.08% and one-year adjustable rate mortgages average 2.86%.
Dr. Frank Nothaft, vice president and chief economist for Freddie Mac said, “The Federal Reserve’s policy statement last week and ongoing market concerns over the European debt market carried momentum into this week allowing all mortgage products in our survey to reach all-time record lows.”
Nothaft notes that refinance applications averaged roughly 70 percent of all mortgage activity in 2011 and refinance volume rose 21.7% in the last week alone.
Home purchase loans are not exactly skyrocketing, but perhaps applications will rise with the good news of historically low rates despite difficulties in getting a loan to the closing table.