Before I even read the following article, but just the headline, I could tick off some answers.
* Lower mortgage rates are helping the housing market. It would be much worse without the lower rates.
* With the prospects for economic growth dismal, people are reluctant to make big purchases.
* Interest rates are higher than conditions would indicate because banks don’t have much money to lend and they don’t want to hire new workers to process mortgage applications.
Despite near-record lows for interest rates and a glut of houses available for sale, Americans simply are not lining up to purchase new or used homes.
According to Freddie Mac (FMCC) average mortgage rates remained below 4 percent for the fourth consecutive week. The current rate, which hovers around 3.98 percent, should be a positive factor in driving the housing market.
Frank Nothaft, vice president and chief economist for Freddie Mac, offered this theory: “Mortgage rates eased slightly this week with fixed-rate loans hovering above all-time lows and ARMs reaching a new nadir. The high-degree of home-buyer affordability in recent months translated into a 1.4 percent pickup in existing home sales during October, according to the National Association of Realtors. The NAR also reported that contract cancellations were up in October as well, which restrained sales from achieving a stronger rebound.”