Mortgage Rates – Rock-bottom mortgage rates tempt hesitant home shoppers
The U.S. government’s efforts to revive the housing market have pushed mortgage rates down to record levels and helped stoke demand, but the prospect of further home-price declines could keep more reluctant buyers on the fence.
The average rate on a 30-year fixed mortgage is below 5% and last week dropped to a fresh all-time low. The previous nadir was set in April. See earlier story on record-low mortgage rates.
Mortgage rates jumped last spring but have declined relatively steadily since then, with investors hoping the economy is on the mend after the credit crunch.
Rates fell sharply in November.
Greg McBride, senior financial analyst at Bankrate.com, said in an interview that two main catalysts are driving rates lower. First, the Federal Reserve has indicated it plans to keep short-term interest rates low for an extended period to help the economy along. The second factor is continued strong demand for government-issued debt despite fears that unprecedented spending to combat the financial crisis will eventually spark a bout of inflation.
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