Low Mortgage Rates Today and Two Earnings Reports Point to the End of the Housing Bust
Record low mortgage rates today have helped the housing market recover from the worst bust since the Great Depression. Two positive quarterly earnings reports from the government-controlled mortgage finance giants, Freddie Mac and Fannie Mae, lend optimism that we have seen the end of home price declines.
Second quarter income at Fannie Mae (OBB: FNMA) was $5.1 billion, up from $2.7 billion in the first quarter of this year. A big improvement when Fannie Mae posted a loss of $2.9 billion in the second quarter of last year.
Freddie Mac (OBB: FMCC), announced second-quarter net income of $3 billion, up from $577 million in the first quarter and a net loss of $2.1 billion in the year-ago second quarter. Both government-sponsored enterprises (GSEs) reported their best quarter earnings since the housing market collapse.
Home prices have stabilized and increased in many parts of the country the past year. CoreLogic said that home prices rose 2.5 percent in June compared with a year ago.
Record low mortgage rates and the sharp decline in home prices over the past several years have made homes more affordable then ever. The National Association of Realtors' Housing Affordability Index hit a record high of 205.9 in first quarter.
Record low refinance rates have brought a surge in home loan refinancing. Two weeks ago 30 year refinance rates hit a record low of 3.49 percent and 15 year refi rates hit a low of 2.96 percent.
If you're thinking about buying a home or refinancing a mortgage you should act now. Today's mortgage rates are so low and probably will be heading higher in the coming years. Current mortgage rates on 30 year loans are already up 20 basis points from record lows set two weeks ago.
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