According to a Reuters article released at the beginning of the month, mortgage rates throughout the United States had remained at or near record lows during the last week of May. Furthermore, the 30-year fixed rate came in at ½ percentage point lower than where it was at just one year ago. Additional reports indicated that home loan rates continued to make affordability high, while the demand for home loans fell to a 13 year low in May. Interestingly, during the weeks preceding this low, the demand for loans had spiked as buyers attempted to take advantage of the homebuyer tax credit that expired on April 30, 2010.
According to many experts, the drop in loan requests experienced in May is likely to be only temporary, as many of the increases in sales that typically take place during the spring simply took place a bit earlier as buyers attempted to take advantage of the tax credit. Furthermore, many experts agree that the low borrowing costs coupled with low home prices will likely put the United States housing market on a gradual path toward recovery during the second half of 2010. In fact, during the week that ended on June 3, fixed 30-year mortgage rates averaged a mere 4.79%. Although this is up by 0.01 percentage point when compared to the previous week, it is still a full ½ point lower when compared to the rates one year ago. Furthermore, this rate is still only slightly above the low of 4.71% that was reached last December (2009).
15 year home mortgage loan rates are also remaining quite low. In fact, a new record of 4.20% was set after the rate dropped an additional 0.01 percentage point. This rate is well below the 4.79% rate that was seen just one year ago.
“The economy grew at a slower rate than originally reported in the first three months of the year, according to the Bureau of Economic Analysis, which suggests inflation will remain tame in the near term,” said Frank Nothaft, who is the chief economist for Freddie Mac. “As a result, mortgage rates held at historic levels this week.”
These low rates are good news for buyers, real estate agents and the economy as a whole, as those who are interested in purchasing a home can potentially save thousands of dollars by taking advantage of these low interest rates. Real estate agents, on the other hand, are hopeful that these low rates will encourage people to continue to both sell and purchase homes despite the expiration of the homebuyer’s tax credit. This, in turn, will benefit the United States economy as it continues to work toward recovering from the recession.
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Tim Ryan 
