For the first time since May, interest rates on long-term mortgage loans dropped below 5 percent this week, reaching near-record lows, according to mortgage financier Freddie Mac. The average rate on a 30-year fixed rate mortgage (FRM) plunged to 4.94 percent, excluding points, for the week ending Thursday, from 5.04 percent last week. Rates have not been that low since the week ended May 28 when it was 4.91 percent. Last year at this time, the average rate was much higher at 6.10 percent.

Other rates also fell significantly with the average on a 15-year FRM dropping to 4.36 percent from 4.46 percent, and the average on a one-year adjustable rate mortgage (ARM) dipping to 4.49 percent from 4.52 percent.

Freddie Mac says this is great for the housing market.

“Low mortgage rates are helping to stabilize home sales,” said Frank Nothaft, Freddie Mac vice president and chief economist. “New home sales in August rose to the highest annualized pace since September 2008 and the inventory of unsold houses fell to the lowest level since February 1983. Although existing home sales fell somewhat in August, it was still the second strongest showing in 23 months.”

Apparently the low rates from the past week were not enough to entice borrowers to the mortgage table, though. The Mortgage Bankers Association reported Wednesday that refinance applications were down by 0.8 percent for the week and home purchase applications were down 6.2 percent.

Even though rates are phenomenally low, the problem may continue to be that many potential borrowers just don’t have the credit to qualify these days. Those who really need to refinance are often behind in their payments or even underwater in their loans and are unable to take advantage of the rates. Others, like many potential first-time home buyers, may not have the down payment money or credit scores to get into a low rate home loan right now. Still, rock bottom rates are probably the best thing for the market until unemployment and foreclosure numbers start to stabilize.

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.

Long-term mortgage interest rates rose slightly in the latest week, as various economic indicators  proved inconclusive, according to mortgage giant Freddie Mac Thursday.

The average rate on the 30-year fixed rate mortgage rose to 5.07 percent, excluding fees, during the week ended February 26, 2009, up from 5.04 percent. This week’s increase was the first in three weeks. One year ago, the average rate was 6.24 percent.

“Mortgage rates were little changed this week amid mixed data reports of a slowing economy,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Both the core Producer Price and Consumer Price Indexes ticked up in January, higher than the market consensus, while consumer confidence in February fell to the lowest reading since records began in January 1967.”

Nothaft also mentioned that historically low interest rates have failed to jump start the home buying market. “Lower house prices and affordable mortgage rates have yet to spur housing demand,” he added. “For instance, house prices declined by 8.7 percent for the 12 months ending in December 2008 and were down 10.9 percent from their highs set in April of 2007, according to the Federal Housing Finance Agency’s purchase-only monthly home price index. However, existing home sales (excluding condominiums and co-ops) fell 4.7 percent in January to 4.05 million units (annualized), the slowest pace since July 1997.”

Rates on 15-year fixed rate loans were unchanged during the past week, holding stable at 4.68 percent. The average rate last year at this time was 5.72 percent.

The average rate on one-year Treasury-indexed adjustable rate mortgages inched up to 4.81 percent, up from 4.80 percent the week before. One year earlier, the average one-year ARM rate was 5.11 percent.

Interest rates on long-term mortgage loans dipped down by only 0.02 percent in the latest week, and rates on other loans saw relatively little change as well, according to mortgage finance company Freddie Mac Thursday.

During the week ended January 29, 2009, the average interest rate on a 30-year fixed rate mortgage inched down to 5.10 percent, excluding fees, from 5.12 percent. Two weeks ago, the average rate was 4.96 percent, while one year ago the rate was much higher at 5.68 percent.

Rates on 15-year fixed rate loans remained constant with the previous week at 4.80 percent. Last year at this time, the average rate was 5.17 percent.

One-year adjustable rate mortgages carried an average interest rate of 4.90 percent, down slightly from 4.92 percent the previous week. One year earlier, the average rate on a one-year ARM loan was 5.05 percent.

“Mortgage rates held steady this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The index of leading indicators rose 0.3 percent in December, the first increase in 6 months, fueled by an expansion in the money supply. However, the Federal Reserve acknowledged in its January 28th policy committee statement that since December the economy has weakened further.”

He cited as evidence an 28 percent annual decrease in the S&P/Case Shiller 20-city index through November and a 15 percent annual decline in home sales through December, according to the National Association of Realtors.

Yet there have been bright spots on the horizon. “Interest rates for 30-year fixed-rate mortgages reached a 50-year low toward the end of December,” Nothaft added. “These two factors contributed to housing affordability reaching its highest level since 1973, as measured by the NAR’s monthly affordability index and help to explain the 7.0 percent increase in existing home sales in December.”

Interest rates on long-term mortgage loans fell to another all-time low this week, breaking the 5 percent barrier, according to mortgage giant Freddie Mac Thursday.

“Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions,” said Frank Nothaft, Freddie Mac vice president and chief economist.

“So far,” he explained, “both the U.S. Treasury Department and the Federal Reserve have added over $100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages. The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008 announcement, to further shore up mortgage lending and keep rates low.”

The average rate on a 30-year fixed rate mortgage dropped to 4.96 percent, excluding fees, during the week ended January 15, 2009, down from 5.01 percent the previous week. The rate has never been below 5 percent since Freddie Mac began keeping track of weekly rates in 1971. One year ago, the average rate was 5.69 percent.

Rates on 15-year fixed rate loans increased slightly however in the latest week with the average growing to 4.65 percent from 4.62 percent one week earlier. Last year at this time, the average rate was 5.21 percent.

One-year adjustable rate mortgages carried an average rate of 4.89 percent, down from 4.95 percent the week before. During the same week of January 2007, one-year ARM rates were higher than even fifteen-year FRM rates at 5.26 percent.

Meanwhile, during roughly the same week, the Federal Reserve bought up $23.4 billion of mortgage-backed bonds from Fannie Mae, Freddie Mac, and Ginnie Mae in an attempt to keep rates low and pump liquidity back into the lending markets.

Federal Reserve efforts helped long-term mortgage interest rates drop to their lowest point on record, for the fourth straight week, according to mortgage giant Freddie Mace Thursday.

“Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae,” said Frank Nothaft, Freddie Mac vice president and chief economist. “On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008.”

“Since the end of October 2008,” Nothaft added, “these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week.”

The average rate on a 30-year fixed rate home loan fell to 5.01 percent, excluding fees, during the week ending January 8, 2009, down from 5.10 percent the previous week. The 30-year loan rate has never been lower during the entire 38-year history of the Freddie Mac weekly survey. Last year at this time, the average rate was 5.87 percent.

Rates on 15-year fixed rate mortgages averaged 4.62 percent, a decrease from 4.83 percent the week before. One year earlier, the average 15-year FRM rate was more than three-fourths of a point higher at 5.43 percent.

One-year adjustable rate mortgages carried an average rate of 4.95 percent, an increase from 4.85 one week previous. A year ago, the one-year ARM average rate was 5.37 percent.

Average interest rates on long-term U.S. home loans increased by the fastest pace in over twenty years during the latest week, according to mortgage giant Freddie Mac Thursday.

The company reported that 30-year fixed-rate mortgages carried an average rate of 6.46 percent, excluding fees during the week ended Oct. 16, a growth of 52 basis points from 5.94 percent the week before. That represents the largest weekly increase since the middle of April 1987. The current rate is even up from last year at this time when the rate was 6.40 percent.

The average rate on 15-year fixed rate loans rose to 6.14 percent during the previous week, from 5.63 percent. One year ago, the average was 6.08 percent.

One-year adjustable rate mortgages (ARMs) saw little change, however, as the average rate inched up to 5.16 percent from 5.15 percent a week earlier. Last year, the average rate was 5.76 percent.

“Interest rates for 30-year fixed-rate mortgages rose this week to an 8-week high,” said Frank Nothaft, Freddie Mac vice president and chief economist. “ARM rates, which tend to be based on shorter-term benchmarks, showed smaller gains in part due to the Federal Reserve’s October 8 inter-meeting rate cut in the overnight lending rate.

“Recent economic reports suggest the economy is still slowing. For instance, retail sales fell for the third consecutive month by 1.2 percent in September. In addition, in its latest Beige Book, released October 15th, the Federal Reserve indicated that economic activity weakened in September across all twelve Federal Reserve Districts and that several Districts also noted that their contacts had become more pessimistic about the economic outlook.”

On a regional level, average rates on 30-year mortgages were highest in the Southeast at 6.51 percent, excluding fees, and lowest in the West at 6.37 percent.

A proposed $700 billion financial sector bailout bill passed in the Senate Wednesday night by a vote of 74-25, after the U.S. House of Representatives failed to pass a similar bill Monday.

The legislative package will give the federal government the authority and funding to buy up roughly $700 billion worth of soured mortgage and insurance securities from major corporate players that would otherwise face bankruptcy.

In an effort to pass the controversial piece of law, the Senate also included $150 billion of tax break extensions and an increase in the federal deposit insurance limit from $100,000 to $250,000.

Until now, public opinion about the bailout had been extremely negative, but the past week of dramatic Dow Jones dips seem to be softening the stance of many voters on this issue. The main concern has been that a “rescue” plan would reward companies for their risky behavior and encourage more bad choices in the future.

The House could vote on the Senate’s bailout plan as early as Friday and House Majority Leader Steny Hoyer was optimistic about the bill’s chances of passing.

“I think there’s a good prospect of getting that done tomorrow,” said the Maryland Democrat on Thursday.

House Financial Services Committee Chairman Barney Frank was more cautious in his predictions.

“It’s still uncertain. I think it is likelier to pass than before,” Frank, a Massachusetts Democrat said in a CNN interview. “The main change is reality. I think that it’s not possible now to scoff at the predictions of doom if we don’t do anything.”

In other mortgage news, a new government program to help troubled homeowners began Wednesday and is expected to help as many as 400,000 American families.

HOPE for Homeowners gives the Federal Housing Administration (FHA) greater ability to insure home loans for mortgage holders facing foreclosure because of skyrocketing interest rates on their ARM loans.

The plan allows the FHA to back up to $300 billion in refinance home loans, but lenders must voluntarily participate, writing down such loans to 90 percent of their current appraised value. Many  HOPE for Homeowners proponents believe most lenders will be happy to get these bad loans off their books.

Steve Preston, Secretary of the Department of Housing and Urban Development called the initiative a “helpful step forward” but added that “it must be part of a larger vision for the future, a vision that will help Americans keep their homes and remain financially secure.”

Borrowers interested in participating in the FHA program can contact their lenders, speak with a HUD counselor, or call 1-888-995-HOPE.

A recent study by the American Association of Retired People (AARP) revealed that the housing market’s foreclosure crisis has not left even older homeowners unscathed.

The study, conducted by the AARP’s Public Policy Institute found that roughly 684,000 homeowners age 50 or older were delinquent on their mortgage during the last half of 2007, with some 50,000 already in some stage of foreclosure.

 ”The public perception is that older Americans are financially secure in their homes,” said Susan Reinhard, director of the Public Policy Institute. “But the reality is that while many are in fact secure, hundreds of thousands of others are not and face unsettling uncertainty over their futures as homeowners.

“Older Americans depend on their homes both for shelter and as a retirement asset,” she added. “Losing a home jeopardizes long-term financial security, with limited time to recover.”

The over-50 crowd represented about 28 percent of all foreclosures and delinquencies nationwide, according to the study. And of all the age 50-plus people in the survey, 24 percent of them were behind on their home loan payments or in foreclosure. While the flip side indicates that the majority of seniors are still making their payments, there is still a significant portion of the population that are facing financial crisis with only a few years left before retirement.

One important, but unsurprising statistic of the study is that older homeowners with subprime mortgage loans (usually adjustable rate mortgages or ARMs) were 17 times more likely to be in foreclosure than their counterparts with prime or good credit loans.

As many Americans facing retirement lose their homes or have trouble keeping up with the payments, Reinhard suggested that the mortgage lending business needs to change. Referring to complex home loan contracts and aggressive loan officers and brokers, she said, “the mortgage environment is very complicated. We need more simplified mortgage contract language that people can understand.”

The AARP study included data from Experian credit reports from over 2.5 million people, including 1 million age 50 and older.