06 Jul 10 Mortgage Activity Slowing Despite Record Low Home Loan Rates
2010 has been a roller coaster ride for mortgage professionals because interest rates have been low but consumers are slower to do anything because of our sluggish economy. Record low home mortgage rates have done nothing to stop a renewed housing slide, as new home sales fell to record lows in May and both mortgage refinancing and home buying volumes fell throughout June.
According to Bob Dorsa, president of the American Credit Union Mortgage Association, “There’s a bit of a fear in the marketplace and people don’t want to do anything.” A strong market in the first quarter of the year had buoyed hopes of a housing recovery, but it appears the first-time homebuyer’s tax credit was a primary driver; since its expiration new home sales were down 32.7% in May to an annualized rate of 300,000. That’s the lowest home mortgage rates reported since record keeping for interest rates began in 1963.
The thirty-year fixed rate mortgage dipped to an average of 4.69%. That is the lowest rates recorded since Freddie Mac between tracking mortgage rates in 1971. The previous record of 4.71% was set in December. The 15-year average fell from 4.20% to 4.13%, also a record low. ARM rates have also moved near record territory, with the average for the five-year ARM falling from 3.89% to 3.85% and the average for the one-year ARM dipping from 3.82% to 3.77%.
Mortgage refinance rates have declined even more over the last two months. Home loan rates tend to track the yields on long-term Treasury debt. Refinance loan volumes have also slowed even as interest rates are falling below levels seen during the “mini-boom” of 2009. Unfortunately most homeowners who are failing to produce enough income to keep their loan payments current usually do not have the required income need to qualify for mortgage refinancing.
In Alabama, Anita Domondon, VP with Meriwest Mortgage noted, “With the Home Affordable Refinance Program enables home refinancing to 125% and for many homeowners that is not good enough because their mortgage is so far underwater.” The notion of a housing double-dip is starting to take hold in some circles, including credit unions. And while CUs across the country have gamely offered loan modifications and debt settlement programs, the rock-bottom rates have left many inflexible on mortgages. The original article was written by Matt Blumenfeld.
Tags: ARM rates, lowest home mortgage rates, thirty-year fixed rate mortgage
