By Mike Colpitts
Mortgage rates moved in the right direction for home buyers this week as rates showed a drop in all categories, breaking a month long increase in rates, according to Freddie Mac. A 30-year fixed rate mortgage declined to 5.0%, a slim 0.05 decrease from last week, which represents a magic number for many consumers. Rates on adjustable loans and shorter term fixed rate mortgages also declined.
The drop in rates resulted from fewer applicants for home mortgages over the last week with higher rates eliminating reluctant buyers from the marketplace. A 15-year fixed rate mortgage average 4.27% for the week with an average 0.7 point down from 4.29% just last week.
The 5-year Treasury indexed hybrid adjustable rate mortgage average 3.87% for loan applicants down 0.05 over last week.
“Fixed mortgage rates eased slightly this week and continue to be very affordable,” said Freddie Mac chief economist Frank Nothaft. “Prior to 2009, interest rates for 30-year fixed-rate mortgages had never been at 5% since our survey began in April 1971.”
A limited pool of home buyers, including first time home buyers that are already leery of the market and buyers looking for deals on foreclosures and short sales, which compose the majority of sales, are slowing a housing recovery in most areas of the U.S.
Sales remain sluggish as the market struggles to regain momentum, despite near record low rates. New homebuilder confidence also remains low with the latest February survey indicating that builders are still glum about future near term prospects.