Mortgage prices have fallen to their lowest point in nearly 40 years, sparking hope that the housing market may soon regain momentum.U.S. mortgage rates this week fell to their lowest point in nearly four decades, giving real-estate industry watchers hope that the housing market may soon regain momentum as banks start helping more people buy or refinance homes. For the seven-day period ending Thursday, the average 30-year mortgage rate declined to 4.32% from 4.36% last week and from 5.08% a year ago, Freddie Mac said Thursday. This week's 30-year rate is the lowest since Freddie Mac started tracking such figures in 1971.

The falling rates already appear to have helped the U.S. housing market, with pending sales growing unexpectedly in July -- although that's likely also due to an extension of tax credits for home buyers. The number of U.S. homes that entered into escrow last month increased 5.2% from June, but still declined 19% from the same month a year earlier, the National Association of Realtors, or NAR, reported Wednesday. Homeowners, home buyers and real-estate industry insiders hope the rates might lead lenders to approve more loans for housing purchases and allow more cash-strapped homeowners to refinance their homes instead of having to sell them or foreclose.

Housing Prices Stabilize

Housing prices "appear to be firming," said Amy Crews Cutts, deputy chief economist at Freddie Mac, in a statement. She added that June housing prices increased in 15 of the 20 metropolitan areas that are included in a composite index for home values. Meanwhile, NAR last week reported that U.S. median home prices increased 0.7% in July from a year ago.

Growing prices may help clear up a bottleneck of sorts for lending. Approximately one of every eight NAR members has said they'd had had at least one of their prospective home sales had fallen out of escrow because the home's value was appraised at less than the negotiated price, according to NAR spokesman Walter Molony. "The appraisal situation may start to improve, but it has been constraining the market all year," Molony says.

Still, in spite of the falling mortgage rates, banks may be waiting for the economy to improve before approving more home purchases and refinances. "Banks were burned by the events of the mortgage meltdown and do not want that to happen again," says Robert Kleinhenz, deputy chief economist of the California Association of Realtors. "We don't expect to see the lax lending standards of the 2000s show up again anytime soon, but banks may be able to ease standards a bit if they sense that economic conditions for households and consumers have stabilized or begin to improve."

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Banks Loan money? What are you kidding. In order for a Bank who by the way was bailed out by us Taxpayers to loan you money you have to have such good credit and finances that you really don't need the loan, so why would you then look for one. Let's face it. Those that need help are not getting it. so plan on loosing your home eventually, if your looking to re-finance.

September 16 2010 at 1:41 PM Report abuse rate up rate down Reply

I find it really funny that rates hit record low (again?)....but yet when i went to check rates at my bank ...after checking them out 60 days prior...they didnt change ?????????????????????????????,,,,did someone forget to inform the banks of this drop in rate.....if so please do so Thank you :) ????????????????

September 03 2010 at 3:16 PM Report abuse +1 rate up rate down Reply

I am so happy. When I recently inquired about refincing my mortgage to one of the new lower rates, I found out two things. First, my mothly payment would go done $ 300 and second I did not qualify. It seems that significant equity in your house (even in this market), a sterling credit rating, and six years of on time payments most of which contained extra principal does not matter. So good to hear that the mortgages that no one can get are out there at a whopping low rate. Alan

September 03 2010 at 2:48 PM Report abuse rate up rate down Reply

The psychology which sets in during deflation is "If I wait, I can get it cheaper later." Just ask those who took out a mortgage just a couple of months ago at higher rates. Rising rates will signal higher real estate activity. Lower rates confirm the continued fall in real estate activity.

September 03 2010 at 4:18 AM Report abuse +1 rate up rate down Reply

Low and falling mortgage rates are a response to weak demand for mortages. More evidence of deflation in the American economy.

September 03 2010 at 2:34 AM Report abuse +1 rate up rate down Reply

Via NewsGallery: Why home owners don't go on protests. See video here:

September 02 2010 at 11:01 PM Report abuse rate up rate down Reply