Mortgage rates continue to fall, who knows where the bottom is but a lot of this downside over the last 18 months is due to the fed buying the mortgage backed securities, these rates are artificially low. 30-Year Mortgage Rate Falls To New Low Reuters | July 22, 2010 | 10:31 AM EDT U.S. 30- and 15-year mortgage rates fell to fresh lows in the past week amid concerns about the state of the economic recovery, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company. Rock bottom mortgage rates offer a glimmer of hope for a housing market that has been struggling to gain traction since the expiration of popular home buyer tax credits several months ago. Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.56 percent for the week ended July 22, down from the previous week's 4.57 percent and its year-ago level of 5.20 percent, according to the survey.
What he says make sense. FED buys these mortgages with printed money thus making the lower rates lower ARTIFICIALLY What is wrong with this statement? IT IS 100% CORRECT
The reason rates are falling is because lending standards are so tight due to new financial rules by the congress, that there are no new loans/demand. Therefore, basic supplyand demand. The fed took 1.25 trillion mbs out of the market, and no new loans are being created. So, deflation.
That would make sense, had the Fed not ended the agency MBS purchase program in March. Mtge rates have continued to fall recently, because, as another poster said, the mkt is expecting deflation. Hence, nobody wants to borrow.