Buyers stay on sidelines even if mortgage rate falls to 3 percent

New York /
Jul.July 23, 2012 04:15 PM

Mortgage rates are regularly plunging to new lows, and the 30-year fixed-rate now sits at about 3.74 percent — a full percentage point less than it was at the same time in 2011. According to CNBC, the rate should continue to its downward spiral and could land at 3 percent, flat.

Mortgage rates follow the yield on the ten-year Treasury note, which just reached a new low today of 1.396 percent. Analysts told CNBC that the yield would drop all the way to 1.25 percent, which, in turn, would further depress mortgage rates.

But that might not make much difference on the U.S. housing market. “Certainly a 3 percent 30-year fixed would make home buying more affordable for some people that may not qualify at 3.5 percent,” Craig Strent of Maryland-based Apex Home Loans told CNBC, “but if people are not entering the market at 3.5 percent, which is already insanely low, then they may not enter at 3 percent, as they may simply prefer to rent or may not have the down payment needed to buy.”

A 3 percent rate might compel borrowers to refinance though — exactly as last week’s record-low rate did — which could boost the economy by enticing spending. [CNBC]


Related Articles

arrow_forward_ios
(iStock/Illustration by Kevin Rebong for The Real Deal)
Watchdog org: Put home-sale commissions in buyers’ hands
Watchdog org: Put home-sale commissions in buyers’ hands
(iStock)
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Princeton proud: Eric Schmidt reportedly bidding to save club
Princeton proud: Eric Schmidt reportedly bidding to save club
Princeton proud: Eric Schmidt reportedly bidding to save club
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
Capital pains: How lenders are getting creative to get paid
Capital pains: How lenders are getting creative to get paid
Capital pains: How lenders are getting creative to get paid
(iStock)
Refinancing has saved homeowners billions, but window is closing
Refinancing has saved homeowners billions, but window is closing
RIP: Zombie homes on the decline
RIP: Zombie homes on the decline
RIP: Zombie homes on the decline
NY seeks $540M in mortgage aid. Homeowners need $6B
NY seeks $540M in mortgage aid. Homeowners need $6B
NY seeks $540M in mortgage aid. Homeowners need $6B
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...