For the first time in history, the average interest rate for a 30-year fixed mortgage is lower than four percent. This presents a rare chance for people with stable finances and good jobs to save thousands of dollars on home financing.
For those up to their ears in payday loans or saddled with bad credit auto financing, this low rate is taunting.
Last week, 4.01 percent was the low on a 30-year fixed mortgage. On Thursday, Freddie Mac reported this was blown out of the water when the rate declined to 3.94 percent. The 15-year fixed loan also had a record day, with the average rate dropping to 3.26 percent on this popular refinancing option. People can now find lower mortgage rates than existed in the golden days of the early 1950s.
Even the steady decline of mortgage rates in recent years has not been enough to boost the housing market. Sales have been unimpressive even though home prices are declining. During the past year, mortgage rates have been under five percent for all but a mere two weeks.
Despite this, previously occupied home sales are tracking to be at among their lowest in 14 years.
Data from the 2010 census indicates that in the past decade, the decline in homeownership has been the largest since the great depression. A difficult lending environment and high unemployment rates have kept people from purchasing and refinancing.
The same can be said for why people are not rushing to good and bad credit auto financing.
For many people, buying a car is too risky in an economy with unemployment exceeding nine percent. Therefore, it stands to reason why they would shy away from purchasing a home. In addition,the historically low mortgage rates are reserved for consumers with excellent credit who can afford a 20 percent down payment.
