The rates on 30-year mortgages last week fell to 4.69 percent, the lowest level on record, mortgage company Freddie Mac reported Thursday. The previous record of 4.71 percent was set in December.
Mortgage rates closely track the rates on 10-year Treasury bonds, which have fallen steeply in recent weeks as the European debt crisis has driven investors into the safe haven of U.S. Treasury securities.
Despite the dramatic drop in the rates on conventional mortgages, buyers remain skittish about purchasing homes because of job worries, while some have encountered difficulties getting banks to approve riskier loans. Recent reports have showed a collapse in home sales after a federal tax credit for first-time home buyers expired on April 30.
The low rates provide a potential bonanza for people wishing to refinance their homes, and have spawned a minor refinancing boom, according to the Mortgage Bankers Assn. However, stricter lending standards by banks also are making it more difficult for some people to refinance, despite the lower rates.
Stan Humphreys, Zillow.com’s chief economist, said the extraordinarily low interest rates will help the housing market eventually to recover, but even with such low rates it will experience a long period of flat sales and prices now that the government stimulus is over.
“What we’re going to see once we hit bottom is the second phase of the housing recession…That second phase is one of being flat,” he told the National Association of Real Estate Editors.
• Patrice Hill can be reached at phill@washingtontimes.com.
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