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Lower Mortgage Rates and Home Prices

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lower-mortgage-rates-and-home-pricesFalling home prices, record low mortgage rates and an $8,000 tax credit are making homes more affordable for first time buyers. Priced out of the market during the housing bubble, first time buyers are back.

Another benefit for first time home buyers is they do not have a house they have to sell in this market. Unlike many current home owners who are unwilling to sell a home at lower prices or who are underwater by owing more than the house is worth.

Last week, the National Association of Realtors reported sales of existing homes rose 5.1 percent in February. In their weekly survey, Freddie Mac also reported that lower 30 year mortgage rates 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. A 15-year fixed rate mortgage averaged 4.58 percent, with an average 0.7 point, down from last week when it averaged 4.61 percent.

Housing prices are also coming back down to their historical trend line. States hard hit by the housing bubble including California, Florida, Arizona and Nevada, are seeing a large percentage of  foreclosures snapped up by first time home buyers. 

Also contribiting to lower mortgage rates is the recent decision by the Federal Reserve to purchase Treasury securities. The Fed’s action caused bond rates to drop which pushed mortgage rates down even more.

Author: Brian McKay
April 6th, 2009

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