By Mike Colpitts
Mortgage rates set a new record low hitting an average of 3.91% on a fixed 30-year loan, according to Freddie Mac. Rates on the shorter 
term 15-year fixed mortgage remained at the same record level as last week.
Rates on the benchmark 30-year mortgage have been at or below 4.00% for eight straight weeks, providing the lowest rates for home buying and refinancing in the history of the Freddie Mac survey. The move, however, by lenders to keep mortgage rates low hasn’t energized the home buying market as consumers worry about the economy and growing doubts linger over the stability of the U.S. housing market.
The fixed 15-year loan averaged 3.21% this week with 0.8 point in closing costs, matching last week. The 5-year Treasury indexed hybrid adjustable rate mortgage averaged 2.85% for the week, down a single basis point from a week ago.
“New construction of one family homes also showed a back to back monthly gain in November to the largest increase since June,” said Freddie Mac chief economist Frank Nothaft, which gave the stock market a single day boost on Wednesday.
However, the majority of gains in the new home builders’ survey was attributed to the growth of multiple family starts or apartment units, which have taken off since the foreclosure crisis has thrown more than 4-million homeowners out of their homes, and they need a place to live.
Refinancing mortgages were expected to see a major increase after the introduction of new guidelines eliminating loan to value limits on refinances through Freddie Mac and Fannie Mae for underwater homeowners. But the new program may lack the incentives homeowners see as worthwhile to refinance.
New guidelines allow homeowners who have obtained a mortgage through Freddie Mac or Fannie Mae to refinance at lower rates, but do not provide for any principal reductions. The program may either be taking longer to produce an increase in refinances or lacks the advantages homeowners need to refinance mortgages.