Mortgage rates remain at historic lows this week with the benchmark thirty-year fixed hovering between 4.625% and 4.875%. After last week’s upbeat reports on the housing market we are reminded this week that were not entirely out of the woods yet. February foreclosure filings rose to 84,000, up from 68,000 in January and a key index of housing prices showed a record drop in home prices for January – down 19% from the year prior. Another report pertinent to our local market was released by the National Association of Realtors showing second-home and investment property sales comprised 30% of all transactions in 2008. This compared to the all time in 2005 when second-home and investment purchases comprised 40% of all transactions. One bright spot this week was a forecast released by an analyst at Moodys.com that predicted home prices would bottom this year and begin rising in 2010.
We have no major reports or bond auctions in the coming days so I see mortgage rates staying about where they are with only minimal day-to-day fluctuations. After all of the efforts by the Fed and signs that the financial system may be stabilizing, I don’t see rates going much lower either in the short or long terms. In fact, recent signs of optimism in the equity markets may begin to eventually erode bond prices and place upward pressure on mortgage rates. That would actually be a welcome sign as it would indicate the onset of an economic recovery which would ultimately benefit the housing market. As for now, let’s enjoy these historically low mortgage rates while they last.
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