Could Lower Mortgage Rates Signal A Stronger Housing Market
Frank Nothaft, vice president and chief economists at Freddie Mac, stated in a news release that weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to accumulate heaps lower for the third consecutive week. In this case, he gave an example about real economic growth in the first quarter that fell short of the market consensus forecast and represented the slowest pace since the second quarter of 2010. Further, he said that the manufacturing and service sectors exhibited growth at a slower rate in April. However, he felt happy about the reports on the housing market.
ARM Rates
Freddie Mae reported on Thursday that the average interest rate for a one-year ARM was 3.14% while the 30-year fixed rate was 4.71%. However, figures of Freddie Mae stated that low fixed rates are not the only adjustable reason to finance just 7% of all-home purchase loans. Again, Frank Nothaft said that homebuyers cast away from ARMS since they were cautious of the potential risks, that is, much larger payments if future interest rates are excessively higher.
Stronger Housing Market
The U.S Census Bureau and the Development of Housing and Urban Development delivered figures showing that the sales of new homes in March increased 11.1% compared with previous year. The sales were predicted to reach about 300.000 of an adjusted annual rate. Further, these figures showed that the median prices of new home sales in that month reached $213.800 whereas the average sale reached $246.800. This means that though the rates of mortgage lowered drastically, the housing market strengthened.
Wait And See
Thus, what is the response of Americans of this situation? Poll conducted by Gallup resulted in the data that it is believed to be a good time for buying homes by 69% of American customers though there is no clear decision whether or not the housing market is truly making a full and permanent reaction. On the other hand, the growth of undecided home sales in March reached 94.1% if compared with the rate in February that was only in 89.5%, with reference to the national Association of Realtors’ last week’s report.
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