Freddie Mac's latest mortgage rate survey showed the traditional 30-year fixed-rate loan averaged 3.75% this week, down from 3.78% last week. It was the fifth straight week of record lows.
Even more eye-catching in Thursday's survey was the average for a 15-year fixed loan — 2.97%, down from 3.04% a week ago. It was the first sub-3% reading in the nearly 21 years that Freddie has tracked the 15-year loan.
With housing markets still troubled, the rates are mainly benefiting refinancers whose luck or self-discipline has left them with significant home equity. Purchase lending remains sluggish: The Mortgage Bankers Association says that less than a quarter of mortgages these days are used to buy homes.
Also contributing to the trend: recent changes in the Obama administration's Home Affordable Refinance Program, which cut the fees for certain borrowers getting new loans if they reduce the term of the mortgage to less than 30 years.
By Freddie Mac's count, 31% of the refinancers in the first quarter of this year opted for shorter-term loans.The question still floating in the air is how do we get potential homeowners to buy homes, not just refinance? It has been a tricky and touchy subject for everyone in the mortgage industry with an unknown answer.
There has been the first time homeowners tax and other home buying incentives put into place, but it doesn’t seem to result in the numbers we all want.
All we can do as of right now is wait and hope and continue to see if the numbers will change. At least we have the refinances hitting record numbers right?