Mortgage rates continued their downward trend last week, falling for the sixth time in the past 7 weeks. However, although rates have hit their lowest level in decades, many consumers have been unable to benefit.
The average rate on 30 year mortgages was down from 4.54 percent to 4.49 percent. The average rate on 15 years mortgages was down to 3.95 percent. Homebuyers have not seen rates this low since the 1950s, back when mortgages ran only 20-25 years.
Lower rates normally present an opportunity for homebuyers to more easily qualify for their dream homes. Likewise, low rates should help refinancers to save money they can use to buy something else, to put into savings or to pay off other debt.
The news for consumers this time, however, isn’t entirely good as the record low rates haven’t translated to more housing activity. Homes sales volume actually fell last month according to Freddy Mac. That is a sign that lenders are tightening credit requirements, making it harder for consumers to qualify for loans.
One factor contributing to the tighter credit market is that the FHA has increased the minimum credit scores required for obtaining mortgage insurance. Referring to the new requirements HUD Commissioner David Stevens said, “These are the latest in a series of changes to allow the FHA to manage its risk better while continuing to support the nation’s housing recovery.”
