Mortgage rates lowest since mid-'50s

Mortgage rates hit their lowest point in more than 54 years this week, with the average rate for a 30-year fixed-rate mortgage at 4.69%.

The rate is the lowest since Freddie Mac started keeping records in 1971. The previous low in the agency's weekly mortgage market survey was 4.71% in December 2009.

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For most Americans, 4.69% is the lowest rate they've seen in their lifetimes. To have purchased a house at a lower interest rate with a conventional 30-year mortgage, you'd have to be at least 75 years old.

The last time we saw lower rates was March 1956, according to National Bureau of Economic Research statistics, when rates were 4.68%. The bureau's earliest statistics are from 1949, when the rate was 4.35%.

Unfortunately, most Americans are in no position to take advantage of record-low rates to buy or refinance. High unemployment, economic uncertainty, negative equity and tightened qualifications for loans are keeping people out of the mortgage market.

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"We fear that the appetite to buy a home has disappeared alongside the tax credit," Paul Dales, U.S. economist with Capital Economics, wrote in a note to clients, The Associated Press reported. "After all, unemployment remains high, job security is low and credit conditions are tight."

An $8,500 tax credit for new homebuyers who signed a contract by April 30 boosted sales earlier this year. Buyers must close by June 30 to get the credit unless Congress extends the deadline.

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Despite low home prices and record-low mortgage rates, all this week's housing statistics were bleak:

• The number of new homes sold dropped 33% in May, to the lowest level since record-keeping began in 1963. New-home sales are down 78% from their peak in July 2005.
• Sales of existing homes fell 2.2% in May. The National Association of Realtors said first-time buyers were responsible for 46% of transactions, probably spurred by the tax credit. Foreclosures and short sales were responsible for 31% of the sales.
• The number of new mortgage applications dropped 5.9% last week, with refinancing applications down 7.3% and purchase applications down 1.2%. Refinancing accounted for 73.8% of the applications.
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"I think that people are just concerned about their jobs and their income in the future," Dick Lepre, senior loan consultant for Residential Pacific Mortgage in San Francisco, told Bankrate.com.

Prospective buyers fear taking on a large mortgage debt when, "in their opinion, there is uncertainty about what their income is going to be over the next few years," he said.

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