MORTGAGE RATES DECLINE

Published On: June 2, 2010

According to a survey performed by mortgage-insurance tital Freddie Mac, mortgage rates on 30-year mortgages averaged 4.84% last week. Rates were quoted late Friday at 4.86% the lowest since December 2009. Rates on 15-year mortgages averaged 4.24% the lowest since Freddie Mac began it survey in 1991.

Economists largely attribute the decline in mortgage rates to the European debt crisis and new concerns about the global economy, which unleashed a massive wave of cash into US Bonds for investors around the world.

Falling mortgage rates can give a powerful boost to the housing market. A general rule of thumb holds that every one percentage point decline in mortgage rates is the equivalent of roughly a 10% reduction in the home price for the buyer. So, if the current rates hold, say economists, that could help stabilize prices and allow current homeowners to sell existing homes without substantial price cuts.

It isn't clear how much home-buying the lower rates will spur. Demand had fallen in recent weeks after buyers raced to close sales ahead of the last month's expiration of an $8,000 federal tax credit for home purchases.

Furthermore, lower rates could widen the pool of people who qualify for a mortgage, while others may find that they qualify for a slightly larger loan.

For more information call our Century21 office today.

For more information on the decline of mortgage rates visit the Wall Street Journal at WWW.WSJ.com.