30-Year Rates Hold as Fed Adjusts Plan
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Saturday, September 26, 2009
Rates for 30-year home loans were unchanged this week and remain close to record-low levels.
The average rate for a 30-year, fixed-rate mortgage was 5.04 percent, the same as a week earlier, the mortgage finance company Freddie Mac said Thursday.
Rates, while above the record low of 4.78 percent hit in the spring, are still generally attractive for people looking to buy a home or refinance.
Applications for home loans rose nearly 13 percent last week as refinancing applications surged, the Mortgage Bankers Association said Wednesday.
The average rate on a 15-year, fixed-rate mortgage fell to 4.46 percent from 4.47 percent, according to Freddie Mac. That was the lowest level on records dating to 1991.
Rates on five-year, adjustable-rate mortgages averaged 4.51 percent, unchanged from a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.52 percent from 4.58 percent.
With the economy on the mend, the Federal Reserve decided Wednesday to stretch out the pace of a program that has lowered mortgage rates and propped up the housing market this year.
The central bank now plans to reach its goal of buying $1.45 trillion in mortgage-backed securities and debt by the end of March, rather than by the end of this year. Analysts said mortgage rates should remain low for now but could eventually head higher.
Home resales dropped 2.7 percent to a seasonally adjusted annual rate of 5.1 million in August, the National Association of Realtors said Thursday. Compared with a year ago, however, home sales are up 3.4 percent.
The inventory of unsold homes on the market fell to 3.6 million from 4 million in July. That's an 8.5-month supply at the current sales pace, the lowest level in more than two years.
First-time buyers purchased almost one in three homes that were sold in August. Together with investors snapping up foreclosures, they have provided most of the momentum in the market this year.
Nationwide sales are up nearly 14 percent from their bottom in January but are still down nearly 30 percent from their peak nearly four years ago. For the housing market to truly return to normal, said Lawrence Yun, the Realtors' chief economist, sales would need to rise to a pace of 5.5 million to 6 million per year.
