Mortgage Rates and Home Sales Drop
Mortgage rates drop to the lowest levels since 1971, but the housing market sales also dropped in July. Video by fox47news.comvideo
Despite mortgage rates dropping to the lowest levels since 1971, the housing market got another dose of bad news Thursday.
Mortgage rates keep falling. The average rate on a 30-year fixed dropped to its lowest level on record dating back to the early '70s. The rate for the most popular mortgage is now 4.15%. The average rate on a 15-year fixed dipped to 3.36% - also a record low.
Some experts say it's a good time to buy a home.
"They're going to bounce around at this level. It's hard to imagine them going lower but if the government has any kind of grip on that - and they appear to - they're not going to let them get much higher than 5.00% in the next two years," says Greg Rand, CEO of OwnAmerica.
But low mortgage rates haven't been enough to boost the housing market. Existing home sales fell in July for the third time in four months. The sales fell 3.5% to a seasonally adjusted annual rate of 4.57 million homes. That is far below the 6 million that economists say must be sold to sustain a healthy housing market.
"Right now, nationwide, 23 percent of all the sales of homes and condos are investors buying them, so unemployment ticking down would be nice. That does drive consumer confidence, but we have to see an overall resurgence of consumer confidence for the homeownership side of the housing market to surge again."
Meanwhile, Freddie Mac reports 70% of all home loan applications in the first half of this year were for refinancing - not for home purchases.
Many experts say bigger down payments and tougher lending rules have kept many potential buyers away. The only thing is those tougher rules are also making for fewer foreclosures in the future.