Somehow foreclosures do not seem to be having the same terrible impact on the housing market as they have previously in this recession. Freddie Mac announced today that long term mortgage interest rates rose in the past week. The average rate on a 30-year fixed rate loan grew to 5.29 percent excluding points, up from 5.22 percent the previous week. Both 15-year FRM loan rates and one-year ARM rates also moved upward. Freddie Mac VP and chief economist Frank Nothaft said the increase was due to better than expected employment reports as well as rising home prices in 17 percent of the nation’s major metro areas.

Yet even as the housing and economic picture is starting to look rosier in many respects, in one particular aspect things are only getting worse. Foreclosure filings in July set a new record high with filings jumping up 7 percent from June and up 32 percent from the previous year, according to RealtyTrac Thursday.  That means one in every 355 American home-owning households received some sort of foreclosure notice last month.

“July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” James J. Saccacio, RealtyTrac’s chief executive, said in a statement.

“Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we’re seeing significant growth in both the initial notices of default and in the bank repossessions.”

The current unemployment rate is 9.4 percent and could reach 10 percent in the coming year.
So where is the disconnect? Why are these growing foreclosures not affecting the markets the same way as they did in the previous months. Interest rate movement would suggest that everything is getting better in the housing market. Are these continued foreclosures not going to affect home prices anymore? How can the housing market recover when foreclosures continue to rise? Perhaps next week’s rate will reflect this latest report.