Thursday, October 6, 2011

Lowest Mortgages rates ever... Will it help a sinking housing market?

A major sign that either americans are still sinking in debts or the banks are not lending except to grade a consume as the housing market is still going down yet the US 30-year mortgage rates have fallen below 4 per cent this week for the first time ever – a sign that the Federal Reserve’s efforts to drive down long-term borrowing costs are having an effect.

30-year mortgage rate averaged 3.94 per cent for the week ending October 6, down from 4.01 per cent the previous week.

“Average 30-year conventional fixed mortgage rates fell below 4 per cent for the first time in history this week,” said Frank Nothaft, chief economist at Freddie Mac. At this time last year, the 30-year mortgage rate averaged 4.27 per cent.

The 15-year fixed rate which is a popular borrowing benchmark for homeowners also dropped to its lowest level on record, falling to 3.26 per cent, the sixth consecutive weekly record. A year ago the 15-year rate averaged 3.72 percent.

Federal Reserve’s Operation Twist, a policy intended to lower long-term Treasury and mortgage yields so as to make home loans cheaper for new and existing borrowers.

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