There is a record drop in mortgage rates for fixed 30-year loans, among signs that the housing market has started emerging from the worst slump since the 1930s.
Rates fell to lowest ever recorded 4.71%
The rate has become as low as 4.71% for the week ended today. This has been recorded as the lowest since Freddie Mac began compiling the data in 1971.
Mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement that the average 15-year rate was 4.27%.
Increase in Mortgage Applications
Low mortgage costs and a tax credit for first-time homebuyers have rendered help to increase the demand for property as in October the number of contracts to buy previously owned homes rose and last week there has been a surge in mortgage applications.
The challenges for the housing industry are jobless rate at a 26-year high and mounting foreclosures.
Rise in Pending Home Sales Index
The National Association of Realtors said on Dec. 1 that, the index of signed purchase agreements, or pending home sales, has shown a rise of 3.7% to 114.1 after rising 6% in September.
Rise in MBA’s Index of applications to purchase home or refinance
In the week ended on Nov. 27 the Mortgage Bankers Association’s index of applications to purchase a home or refinance a mortgage rose 2.1%. A 4.1% rise in purchase index and 1.7% rise in the refinancing has been noted.
Federal Reserve program has helped reducing mortgage rates
This year a Federal Reserve program to buy up to $1.25 trillion in securities backed by home loans has helped to reduce the mortgage rates. The program is scheduled to end in the first quarter of next year.
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