The Federal Housing Finance Agency (FHFA) recently confirmed what has long been known: 2009 saw the lowest mortgage rates in 50 years. An FHFA's press release said:
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 4.92 percent in December, down 8 basis points from 5.00 percent in November. The effective interest rate, which reflects the amortization of initial fees and charges, was 5.01 percent in December, down 8 basis points from 5.09 percent in November.
The FHFA data are reflected in Freddie Mac's "Monthly Average Commitment Rate And Points On 30-Year Fixed-Rate Mortgages Since 1971" table. Both sources show that when averaged out, the lowest mortgage rates were in April and May last year.
Other Freddie Mac statistics show--when looked at weekly--the best mortgage rates in 50 years occurred during the week ending December 3, 2009, when 30-year fixed-rate mortgage loans dipped to an average of just 4.71 percent.
Housing Market Recovery Approaching?
Recently, Ed Haldeman, CEO of Freddie Mac, delivered a speech to the Detroit Economic Club. His tone was generally upbeat as he discussed the prospects for both the economy and the housing market. He remarked:
Nationally, the macroeconomic data seem to indicate we're in transition to a recovery. Our best estimate is that the rate of growth this year will be relatively modest following such a severe recession--say, 3 or 3.5 percent growth--but that, importantly, the recovery will be sustained over time.
In housing, we're seeing signs of stabilization as well. The numbers will always bounce around some, but from home sales to house prices, it appears that nationally we may at last be approaching a bottom. The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive. Upside factors include the tax credit for home purchases that was extended through April 30th. And of course it helps that mortgage rates are low. We expect the 30-year fixed rate to remain between about 5 and 6 percent throughout 2010. Even the high end of that range is historically a low rate.
Commenting on Mr. Haldeman's speech, the Wall Street Journal stressed the economic clouds that are still to be seen on the horizon. It said: "Haldeman's comments underscore the uncertainty that still exists regarding recovery of the U.S. economy. The market could be hurt if a large wave of both home and commercial properties hit at the same time."
Refinancing and Buying Now Still Attractive
Nevertheless, Mr. Haldeman's remarks make a compelling case for buying a home or refinancing now. Current mortgage rates are still low, and the chances of house prices rising are high.
If you want to refinance or find a home loan, find a competitive mortgage quote now.