Mortgage Rates at 2011 Low, but Many Won't Benefit

Mortgage rates have hit lows for the year and could soon near the decades-low levels of last year.

Those rates are providing an incentive for buyers, along with falling home prices. They're tempting for refinancers, too.

Still, analysts say the combination isn't likely to lift the depressed housing industry or contribute much to the overall economy. In many metro areas, real estate is straining under the weight of foreclosures, higher down-payment requirements, tighter credit, still-high unemployment and buyers' expectations of even lower prices.

"If people aren't confident about the economy, about jobs and home prices, they certainly aren't going to sign up for the biggest purchase of their lives," said Greg McBride, a senior analyst at

But for those with jobs, money and creditworthiness, today's rates can be tantalizing.

This week, a qualified buyer could expect to finance a home over 30 years at an average fixed rate of 4.63 percent, according to mortgage buyer Freddie Mac. That's the lowest average rate in five months. In November, the rate hit a four-decade low of 4.17 percent.

The 15-year fixed mortgage, popular with refinancers, is down to 3.82 percent. That's also the lowest point since December.

Mortgage rates have fallen for four straight weeks, tracking the yield on the 10-year Treasury note. The 10-year yield has dropped as investors have snapped up Treasurys and other safe securities because of uncertainties about the global economy and the volatile prices of oil and other commodities.

Weak sales and a growing belief that prices have yet to hit bottom five years after the housing bubble burst have become a major obstacle for the economy. Homebuilding is down. Fewer first-time buyers are entering the market. The pace of home sales remains far below the level economists view as healthy.

But the biggest threat is foreclosures, said Mark Vitner, a senior economist at Wells Fargo. A wave of foreclosures is forcing down prices in most major U.S. cities.

About 3.7 million homeowners are at serious risk of losing their houses, according to the Mortgage Bankers Association. Foreclosures typically drag down the prices of nearby homes, putting even more homeowners in a financial bind.

More than a quarter of homeowners can't sell their homes because they owe more on their mortgage than their house is worth. And many would-be buyers are holding off on a purchase, mindful that prices might fall further.

"What good is a low rate if you're upside down on your mortgage?" said J. Philip Faranda, who runs a real estate firm in Westchester County, N.Y.

Even those who do feel ready to buy are having a harder time qualifying for a mortgage. The average credit score for a loan backed by Fannie Mae and Freddie Mac has jumped to 760, compared with 720 four years ago, according to the government-run mortgage buyers that back 90 percent of new loans. Fewer than half of American adults have credit scores as high as 760.

And banks are insisting on higher down payments. The median down payment rose to 22 percent last year in at least nine major U.S. cities, according to a survey by, a real estate data firm. That's up from 4 percent in 2006.

"Lenders are reluctant to hand out loans unless you can bring some skin to the deal, in the form of a bigger deposit," said Patrick Newport, U.S. economist for HIS Global Insight. "Until that changes, low mortgage rates aren't going to make that much of a difference. Credit is simply hard to get."

Home-loan financing has remained tight despite a wave of hiring, stronger consumer and business spending and a steadily rising economy. About 92 percent of banks say credit standards on mortgage loans have remained basically unchanged, according to the Federal Reserve's senior loan office opinion survey released last month. About 45 percent said demand for home loans has been moderately weaker.

"There aren't many buyers with deep enough pockets who can put 20 to 25 percent down," said Julie Longtin, a real estate agent with RE/MAX Cityside in Providence, R.I.

And only two-thirds of Americans view homeownership as a safe investment, down from 83 percent in 2003, according to a Fannie Mae survey this year. Few economists see home values rebounding this year.

"The concern is, 'Are values going to go up at this point, or go down or flatline?'" said Ben Coleman, broker-owner of Century 21 Hartford Properties in San Francisco. "I've seen where interest rates were dropping, and it's almost like a 'ho-hum.'"

The rate on the 30-year mortgage has spent most of the past year below 5 percent. Until last year, that would have been considered a bargain. This time, even those who could afford to buy will likely take a pass.

"What really may be the catalyst for buyers is when rates start moving back up," said Mark Zandi, chief economist at Moody's Analytics. "Rates are low and still seem to be falling, so there's no pressure now to pull the trigger."

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June 11 2011 at 11:52 PM Report abuse rate up rate down Reply

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May 18 2011 at 5:20 AM Report abuse rate up rate down Reply

Ain't no qualified buyers lookin' to buy right now.We done bought, we ain't upside down on or mortgages and we ain't gonna' sell what we got to grab a bigger house with a bigger debt. The lenders ust need to get used to the idea that there is less money around to throw away on mortgage fees in htose flakey, brokered "highest interest for the poorest" loans. Ain't no other way ta git rid o' them pesky robo-lenders 'cept to ingnore 'em.,

May 14 2011 at 11:13 AM Report abuse rate up rate down Reply

The Refi Plus program will waive the normal credit score requirement for a refinance; it will have reduced documentation standards for proof of income; and it will allow for computer-based appraisals, which tend to inflate the value of a home and make it easier to qualify for a refinance. Search online for "Mortgage Refinance 123" they are the best and fast.

May 14 2011 at 5:55 AM Report abuse rate up rate down Reply

Just more spin and the usual B.S. from the corporately owned and controlled mass media. It's now {The Mass Media} what George Orwell referred to as "The Ministry of Truth" in his book, "1984". "Big Brother's" mouth piece of propaganda. In a world where "2 + 2 = 5" anything can be the truth. "What is the truth?". "What ever Big Brother says it is."

Our government has been stolen from us. It does not serve us. We serve the government­. The Revolution­ary War was precipitat­ed over far less oppression from the British Crown than we are now experienci­ng from our own out of control government­. We no longer have of government that is "of, by and for the people". It's really of, by and for the globalists and the super rich financial dynastic families behind the world's central banks and Fortune 500 Companies.

Our government is in the total control of the internatio­nal bankers through The Federal Reserve, Investment Houses, like Goldman Sachs, and the huge multinatio­nal corporatio­ns. Pay-offs and bribes, blackmail and threats are their stock in trade for control.

These same corporations own and control 95% of the mass media. A.P., REUTERS, NBC, CBS, ABC, MSNBC, CNN, FOX, WESTWOOD ONE, NEW YORK TIMES, WALL ST JOURNAL, CHICAGO TRIBUNE, AND JUST ABOUT ANY OTHER MAJOR NEWS PAPER YOU CAN THINK OF. All major Hollywood productions. All of the information through the major media is strictly controlled, by spin, editing and good old fashioned out and out lies. T.V. is the primary disinformation, brainwashing and societal change mechanism. We are trained to think what our owners want us to think. We are trained to buy what they want us to buy. We are trained to believe what they want us to believe.

They give you the candidates of THEIR choice. It is the old game of "Heads I win and Tails, you lose". They want you to believe you have a choice. You don't have a choice. Just to be sure, they can and do rig elections with their computer voting machines. As Uncle Joe Stalin said that "they who vote mean nothing but they who count the votes mean everything."

They are globalists and want the complete economic destructio­n of the good old USA so we can be peacefully herded into their Utopia which they and their minions refer to as "The New World Order".

Hungry people are easy to control.

Herr Heinrich {Henry} Kissinger has said, "Vee kontrol zee nazuns vith zee oil and vee kontrol zee peoples vith zee food". Henry has been a water boy for the globalists­, specifical­ly the Rockefelle­r syndicate, for at least 45 years. His power far exceeds that of the President. Zbignev Brezenski, who is a special consultant to the President, has served the same interests for at least 40 years. He too has power above the office of President.

If you look behind the curtain { The Major Media Propaganda } you can find the truth.

May 13 2011 at 5:02 PM Report abuse rate up rate down Reply

people are on the side line now but soon the PEOPLE will get there TRAP money at %0 then buy a house hold it for year and sell at a profit like bank and thing will get better we can all be like bank NEVER EVER LOSE MONEY JUST THE PROFIT THEY THINK THEY SHOULD HAVE MADE like they say we should have made 3 billion but only made 2 billion so they say we lost money but hope olny to make a billion remember buy high and sell higher

May 13 2011 at 12:19 PM Report abuse rate up rate down Reply

Elections are coming, and it sounds like they would like to re inflate the housing bubble, which is a gimmick to get votes. In doing this both parties are in the same boat, seeing on how voters are in a flip flopping mood.

May 13 2011 at 11:31 AM Report abuse rate up rate down Reply