Fixed and adjustable-rate mortgages fell to record lows, Freddie Mac announced this morning, but a New Jersey economist doesn’t think the bargain rates will do much to help the depressed housing market.
Thirty-year fixed-rate mortgages averaged 4.12 percent for the week ending Sept. 8, down from last week’s 4.22 percent, according to the government-sponsored entity, which purchases loans from lenders. Last year at this time, 30-year fixed rate mortgages averaged 4.35 percent.
Similarly, one-year Treasury-indexed adjustable rate mortgages averaged 2.84 percent this week, down from last week’s 2.89 percent. A year ago, they averaged 3.46 percent, according to Freddie Mac.
“Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields, and allowed fixed mortgage rates to hit new lows this week,” Freddie Mac’s chief economist, Frank Nothaft, said in an announcement. “On net, the economy added no new jobs last month and was the weakest reading since September 2010.”
Despite the record lows, “it is not as if rates have fallen suddenly,” said Patrick O’Keefe, director of economic research at the Roseland CPA firm J.H. Cohn. “Nor is there any threat of an imminent rise. For credit-worthy individuals with sufficient equity, rates have long been attractive, and further reductions won’t stir much activity.”
He said a “witch’s brew” of record-low homeowner equity and high rates of delinquency, defaults and foreclosures are driving a surplus of housing inventory.
“That is pressuring prices and confounding price discovery,” he said, adding that puts pressure on transactions and appraisals, and “exacerbates restrictive underwriting criteria.”