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Mortgage rates near 54-year low. Yawn.

Few Americans can take advantage of near-record rates. But down-payment requirements for purchases may be easing.

By Teresa Mears Jun 10, 2010 2:37PM

How low are home mortgage rates?

 

The average rate for a 30-year fixed-rate mortgage is within one one-hundredth of a percentage point of the lowest rate we've seen in most of our lifetimes, the 4.71% reported the week ending Dec. 3, 2009. If rates decline two one-hundredths of a percentage point, we're back to the spring of 1956, when the average rate hit 4.68%, according to National Bureau of Economic Research statistics.

Rates for 15-year mortgages fell for the fourth straight week, to 4.17%, the lowest rate since Freddie Mac started tracking 15-year loans in 1991.

 

Where are the balloons and confetti?

 

The news is being greeted with a collective yawn, because other economic forces make it difficult for most Americans to take advantage of the low rates. Rates have hovered near historical lows for nearly two years, meaning those who could take advantage of low rates to buy or refinance have likely already done so. Unemployment and more stringent lending standards are keeping many people out of the market.

Nick Timiraos headlined his post for the Wall Street Journal's Developments blog "Low interest rates met with blank stares." He wrote:

But many borrowers can't refinance because they don't have enough equity, their credit isn't strong enough, or their income has fallen in recent years. Others may qualify but face extra fees that make refinancing too expensive to justify. Also, many of those who could refinance likely did so when rates fell to comparable levels last year in March, August and December.

He notes that demand for mortgages to buy homes went down again last week, for the fifth straight week, to its lowest level since February 1997. The decline in demand coincided with the April 30 end of an $8,000 homebuyer tax credit. Qualifying buyers already under contract have until June 30 to close.

While housing prices are down nationwide, demand hasn't increased, Diane Saatchi, senior vice president at Saunders & Associates in Bridgehampton, N.Y., told Reuters. She said:

It could be due to the tax credit expiration or general uncertainty about the economy or both may be responsible. For the most part, the daily financial news has been grim and there is worry about a double dip in the economy, so buyers are waiting and inventory is growing.

If you're ready to buy a house in every way but in saving up a large down payment, you may be in luck. Holden Lewis wrote this week at BankRate.com about four types of mortgages available with little or no money down.

 

He noted that some private mortgage insurers have lowered down payment requirements for conventional loans to as low as 5%, even in areas hard hit by the housing bust.

 

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