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
1440 Broadway and One Park Avenue (Google Maps, Vornado)
These were the largest Manhattan real estate loans in March
These were the largest Manhattan real estate loans in March
Better CEO Vishal Garg and SoftBank CEO Masayoshi Son (Better.com, Getty)
Better.com lands $500M investment from SoftBank
Better.com lands $500M investment from SoftBank
An index tracking applications for mortgages to purchase homes decreased 5 percent. (iStock)
Frenzy ending? Mortgage requests fall 5%
Frenzy ending? Mortgage requests fall 5%
(iStock/Illustration by Kevin Rebong for The Real Deal)
March madness: Homes sold faster than ever last month
March madness: Homes sold faster than ever last month
February were 10.4 percent higher than last year. (iStock)
Home price growth hits 15-year high
Home price growth hits 15-year high
(iStock/Illustration by Kevin Rebong for The Real Deal)
Foreclosures and evictions could be halted for rest of 2021
Foreclosures and evictions could be halted for rest of 2021
CFPB acting director Dave Uejio (CFPB, iStock)
Mortgage lenders must prevent “tidal wave” of avoidable foreclosures: CFPB
Mortgage lenders must prevent “tidal wave” of avoidable foreclosures: CFPB
Overall, mortgage credit availability is at its lowest level since 2014. (iStock)
Mortgage lenders play hard-to-get
Mortgage lenders play hard-to-get
arrow_forward_ios

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

Loading...