The tumultuous housing market has added another twist this week as 30-year mortgage rates fall to a low 4 percent. This rivals, but doesn’t beat, the all-time low of 3.94 percent.
Rates are decreasing in efforts to help the struggling housing market and increase home sales but according to Fed Chairman Ben Bernanke, it’s not working.
The low rate of 4 percent is good news for those looking to buy, but shows how truly desperate the economic situation is for many Americans. The reason for the lack of buying increases, is because many Americans are not eligible for mortgages due to their income, joblessness or poor credit. Even the good news out of the housing crisis comes with a side note.
For example, new home purchases have shown an increase recently, but this is because those in charge of the projects drastically decreased their asking prices.
Mortgage Rate Drops: A Sum Up
30-Year mortgage rates were not the only things that saw a decrease this month, here are some other figures coming out of Freddie Mac:
- 15-Year Mortgages fell from 3.38 percent to 3.31 percent, the record low is 3.26 percent.
- 5-Year Adjustable Loan Rates fell to 2.96 percent from 3.08 percent, matching the all-low from four weeks ago.
- 1-Year Adjustable Loan Rates fell to 2.88 percent from 2.90 percent, .07 percent away from last months all-time low
Clearly there are decreases across the board, and most numbers are at, or nearing, their all time lows. Although October numbers are not in yet, the country is dangerously close to the 13-year low of previously-owned homes purchases we had hit last year.
Bernanke has been encouraging Americans to have a little faith and invest in our economy, even if growth is slow. According to the Fed Chairman, investing in the economy is the best way to ultimately earn money from your investments.
Freddie Mac collects data from mortgage lenders across the country from Monday through Wednesday of each week in order to calculate these average rates.