Mortgage lending in the United States fell to a 16-year low in 2011, amid a struggling recovery and slowing refinancing activity, the Wall Street Journal reported. More specifically, the number of home loans fell 10 percent to a total of 7.1 million.
Broken down, mortgages for new homes slid 5 percent, whereas mortgage refinances dropped 13 percent.
According to the Federal Reserve, who provided the data, one reason for this development could be the expiration of tax incentives for first-time home buyers. According to National Association of Realtors figures, the amount of home purchases made by first-time buyers dropped 10 percent to 37 percent last year from roughly 47 percent in 2010, when those tax incentives expired.
As previously reported, mortgage rates could be even lower than the currently low rates. That’s because banks are generating revenue by having borrowers pay a higher interest rate for loans than what they’re paying on the bond market. This has kept rates stuck at 3.55 percent for a 30-year fixed-rate mortgage. [WSJ] – Zachary Kussin