Home Affordability Slips Slightly But New Record Low 30 Year Mortgage Rates Could Provide Boost

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30 Year Interest Mortgage Rate Hits Record Low at 3.40 Percent

We’ve been seeing historically low mortgage rates for quite a while now, but according to a recent article from NBCNews.com, rates fell yet again, setting a new record. NBC reports that average U.S. rates on 30 year fixed mortgages fell to 3.40 percent for the week of September 27. This represents a small drop for the previous week’s rate of 3.49 percent, which was the lowest recorded rate since long-term mortgages began in the 1950s.

According to mortgage buyer Freddie Mac, the average rate for 15 year fixed rate mortgages also hit a new low, dropping to 2.73 that same week from 2.77 the previous week.

The reason for the new low mortgage rates could be due to the Federal Reserve’s purchase of mortgage securities, according to Frank Nothaft, vice president and chief economist for Freddie Mac.

Some experts are even anticipating rates to fall further as the Fed’s bond purchases may impact mortgage rates as well. So, if you’re thinking of buying a home, you may want to do it sooner rather than later. While interest rates may dip lower, inventory continues to remain tight and home prices are actually on the rise.

For information on today’s refinancing or home purchase options, contact a reputable lender servicing your area.

Home Affordability Declines Slightly in Second Quarter of 2012

Large home in the countryIn a report from mid-August, the National Association of Home Builders announced that for 2012’s second quarter, home affordability was down. They attributed it to the fact that across much of the nation, home prices saw modest increases. Their findings were published in the NAHB/Wells Fargo Housing opportunity Index or HOI.

In the first quarter, 77.7 percent of homes were considered affordable to families that fell into the national median income bracket of $65,000 annually. By the end of the second quarter, that was down to 73.8 percent. Again, analysts of the survey note that this change is due to increasing home prices. In fact, between the two first quarters of 2012, 92 percent of the metro areas studied, experienced increases in median home prices.

While that was good news for anxious sellers, it puts home ownership just out of reach for some prospective buyers, even with the continuing low home financing rates.
The NAHB chairman, Barry Rutenberg reflected that historically, interest rates and home affordability are still up, “the decline in the latest HOI is a positive development because it is another signal that the housing recovery is starting to take root, and it lends needed confidence to prospective buyers and sellers who have been reluctant to move forward in the current marketplace.”

The NAHB article also cited those markets considered the most affordable in spite of the recent news. Of those, the best one was the Youngstown-Warren-Boardman, OH-PA metro. For median earners, 93.4 percent of the homes sold were deemed affordable. Other larger markets where property ownership was attainable were Dayton, OH, Niagara Falls, NY, Carmel, IN, and Modesto, CA.

Smaller markets where the affordability percentages were well over the 90 percent mark included Fairbanks, AL, Mansfield and Springfield, OH, Carson City, NV, and Kokomo, IN.

As for those areas considered pricey, only 29.4 percent of the homes sold around White Plains, NY and Wayne, NJ, fell within the financial reach of those families earning the local median income of $68,300.00. These areas have remained high for 17 quarters in a row. Other expensive markets were throughout California, and most notable were San Francisco and Long Beach. Areas in the Bridgeport, Stamford, and Norwalk, CT metros also remained on the high side.

To read more about home price trends, please visit http://www.nahb.org/hoi for tables, historic data and details.

Steph Meyer is a contributor to the ForTheBestRate.com Blog and keeps us up to date on interesting happenings within the world of home financing and real estate. She’s got a quick wit and keen eye on making smart financial decisions. My Google Profile+

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