Why Aren’t Cheap Mortgages Helping The Housing Market?

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.

John Thorpe writes for Forbes:

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.”

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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