Low mortgage rates fail to spur borrowing: VIDEO

Do low mortgage rates actually motivate borrowers? The affordability of getting a loan is not spurring consumers to borrow, despite the Federal Reserve’s efforts to hold mortgage rates at record lows, according to Sentinel Investments data cited by Bloomberg News.  (see video)

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“Americans are still de-leveraging,” Bloomberg’s Michael McKee said. “They are not enthusiastically buying into a recovery, yet. Mortgage rates have been going down for a long time, and it hasn’t influenced behavior.”

One explanation, Bloomberg’s correspondents suggested, is that all-cash buyers are distorting the market place, while “Generation Y” is too burdened down with student loan debt to afford a home. Another reason for the fall in applications could be that housing prices have fallen so much that the size of the mortgages is also significantly lower. [Bloomberg] –Christopher Cameron