Mortgage Rates Decline as Economic News Worsens
With the nation’s economy continuing to head down, mortgage interest rates last week declined across the board in Freddie Mac's Primary Mortgage Market Survey.
The 30-year fixed-rate mortgages averaged 5.04% for the week ending on Thursday, Feb. 19, Freddie Mac reported, down from 5.16% for the previous week and 6.04% one year earlier.
“Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing, which reduces the future threat of inflation,” said Frank Nothaft, Freddie Mac’s chief economist.
“And consumer sentiment fell in February for the first time in three months to near its lowest level since May 1980,” he said, “while industrial production slowed in January by more than the market consensus. In addition, the Federal Reserve lowered its growth forecasts for this year during its policy-setting meeting on Jan. 27-28, noting a deeper contraction in the economy as the credit crunch tightens.”
In a Feb. 18 address at the National Press Club, Fed Chairman Ben Bernanke said that “the recent economic statistics have been dismal.”
Beyond those statistics, Bernanke said, “we must never forget, are millions of people struggling with lost jobs, lost homes and lost confidence in their economic future. In examples that resonate with me personally, the unemployment rate in the small town in South Carolina where I grew up has risen to 14%, and I learned the other day that what had once been my family home was recently put through foreclosure.”
Nothaft noted that conditions in the housing industry have continued to deteriorate along with those in the general economy.
“Meanwhile, the housing market is not doing any better,” Nothaft said. “New housing construction slowed to an all-time record low of 466,000 homes (annualized) in January since records began in January 1959. And although home builder confidence ticked up in February from a record low, builder expectations of sales over the next six months hit a record low since it was published in January 1985.”
The 15-year fixed-rate mortgage averaged 4.68% last week, down from an average of 4.81% in the previous week and 5.64% a year earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.04% last week, down from 5.23% the week before and 5.37% a year earlier.
One-year Treasury-indexed ARMs averaged 4.80%, down from 4.94% in the prior week and 4.98% a year earlier.
Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
“The new tax credit provides a great opportunity for first-time home buyers,” said NAHB Chairman Joe Robson. “Combined with today’s near record low interest rates, the large selection of homes on the market and very competitive pricing, the tax credit should provide the extra incentive needed to get prospective buyers who have been sitting on the fence into the market.”
Industry professionals are encouraged to highlight the tax credit Web site when marketing to their potential first-time home buyer market.
Plan to Attend Construction Forecast Conference
Plan to attend or watch the 2009 Spring NAHB Construction Forecast Conference & Webcast on Thursday, April 23 in Washington, D.C. to get the latest facts, insights and analysis of the housing industry.
Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
For more information and to register, visit www.nahb.org/cfc.
Want to Know the Housing Starts Through 2017?
Find out in HousingEconomics.com's Long-Term Forecast.
Subscribe and get downloadable Excel tables that feature the housing starts forecast, gross domestic product (GDP), demographics and more.
To learn more, visit www.housingeconomics.com.