Mortgage Rates Fall, Boost Housing Sales

According to Freddie Mac, all national mortgage rates declined last week, and some options set new record lows.  Economists believe the declines are fueling the rebound in housing, as more Americans reenter the market to buy a home of their own.

Freddie Mac economists noted that the 30 year fixed rate mortgage fell to 3.4 percent from the previous week’s 3.41 percent.  Although the change is minor, the shift downwards is another step towards the record 3.31 percent that was attained back in November, 2012.  The 30 year fixed rate plan remains one of the most popular options across the country, and economists believe any rate decline, regardless of how small the change is, will encourage more Americans to buy.

While the 30 year rate shifted towards its previous record low, the 15 year fixed option succeeded in setting a new low.  The 15 year rate fell to 2.61 percent, which beat the previous record low of 2.63 percent last November.  Refinancers often select the 15 year option, and a new record low rate will make the plan more attractive to homeowners in the popular spring home buying and refinancing season.

The active buying market is helping homes recover some of the value they lost during the housing crisis, while construction crews continue to break ground on new home developments.  Government reports also indicate that buyers are active again, as the number of new home sales in the first few months of 2013 exceeded 417,000.  

Freddie Mac economists caution that 700,000 unit sales is a healthier figure for this time of the year, indicating the market still has a long way to go.  But the sale pace increased in March by 18.5 percent compared to March, 2012, and economists forecast the market could be back on track by the end of the spring.