Housing Rebound

The recent positive news on new and existing home sales in February points to a housing market that might have seen the worst days behind it. Freddie Mac released more positive news in the form of record low interest rates.

In its survery 30-year fixed-rate mortgage averaged 4.85 percent with an average 0.7 point for the week ending March 26, 2009, down from last week when it averaged 4.98 percent.

Last year at the same time, a 30-year fixed rate mortgage averaged 5.85 percent. This is the lowest mortgage rate in the 38 year history of the survey.

A 15-year fixed rate mortgage averaged 4.58 percent this week, with an average 0.7 point, down from last week when it averaged 4.61 percent. Last year at the same time a 15-year FRM averaged 5.34 percent. This is also the lowest mortgage rate on a 15-year mortgage ever recorded in the survey.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.96 percent this week, with an average 0.7 point, down from last week when it averaged 4.98 percent. A year ago, the 5-year ARM averaged 5.67 percent. Another record low mortgage rate in the history of the survey.

One-year Treasury-indexed ARMs averaged 4.85 percent this week with an average 0.6 point, down from last week when it averaged 4.91 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

Home prices are also coming back down to their historical trend line, making housing more affordable especially for first time home buyers. Further fueling lower mortgage rates is the recent decision by the Federal Reserve to purchase Treasury securities.  This caused bond rates to drop which caused mortgage rates to go down more.

The last piece of the puzzle to a housing recovery is a lower inventory of homes available for sale. Once this equation returns to a more historical level, housing prices should start to rise.

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