(Image Source: Historical Mortgage Rates)


BY RUISHA QIAN

Mortgage rates are cheaper than ever.

That’s what Freddie Mac is saying. In a statement, the mortgage giant writes...

“30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.”

So, why is the record low happening now? Sam Chandan, professor at the Wharton School of Business tells Fox News -- fears of a double-dip in the housing market are driving rates down.

“It largely reflected that confidence in the economic outlook is fairly weak and that investors … they're worried about the possibility of a relapse into recession here in the united states. … the GSE bonds that are driving mortgage rates are tracking those treasuries to levels that are, you know, as low as we've ever seen.  and low rates sometimes encourage people to get into the market because you can borrow money cheaply.”

But the lower rates won’t impact everyone.

The Christian Science Monitor says...it will only help those who are qualified to refinance their homes. And many are in tough shape.

“Many homeowners don’t qualify for a new loan because the value of their homes has fallen so much that they’re ‘underwater’ – they owe more on the loan than the property is worth. Others don’t have enough equity left in their home to get a low rate. Still others no longer have full-time jobs – or their credit scores have dropped, making banks leery of lending to them.”

So will the historic rates help dismal housing numbers rebound? Experts predict the low mortgage rates will do little to boost home sales because the demand just isn’t there.

And Paul Dales, a senior economist at Capital Economics tells the Financial Times that’s not going to change anytime soon...

“The structural factors that are squeezing demand, such as widespread negative equity, more stringent mortgage qualification standards and a reduction in the desire of Americans to own a home, will linger for years.”

Keith Gumbinger, a mortgage information provider, says the falling rates aren’t a surprise -- history shows it’s a natural time for them to drop. He tells CNNMoney:

"Record low rates, blah, blah, blah: We've already heard this... Other than the price of money, nothing else has happened... The lowest mortgage rates come at the bleakest periods.”

So far, it appears potential buyers aren’t responding to the falling rates. Mortgage applications actually fell compared to last week, according to a survey by the Mortgage Bankers Association.


 

Business News

Mortgage Rates at Historic Low: Time to Buy?

October 7, 2011
(2:24)
Mortgage Rates are at historic low, falling to below 4%.
   
TRANSCRIPT

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