According to a recent survey from Freddie Mac, mortgage rates will finish 2011 hovering near historic lows as the rates continue to make homeownership more affordable for a large number of prospective borrowers.
The mortgage giant's Primary Mortgage Market Survey indicated that the average rate for a 30-year fixed-rate mortgage has been at or below 4 percent for nine consecutive weeks and only twice in 2011 did it move above 5 percent.
Currently, the rate for a 30-year FRM is at 3.95 percent, edging higher over the previous week when it averaged 3.91 percent. However, at the end of 2010 the rate was at 4.86 percent. Additionally, the rate for a 15-year FRM averaged 3.24 percent, a slight increase from last week when the rate averaged 3.21 percent.
"Mortgage rates ended the year hovering near historic lows in an already affordable housing market," said Freddie Mac chief economist Frank Nothaft. "For instance, the seasonally-adjusted S&P/Case-Shiller 20-City Composite home price index in October was the lowest seen since March 2003."
Additionally, the report showed that the hardest hit areas were Las Vegas, with the lowest reading since January 1997, while Atlanta recorded the lowest prices since June 1998.
Meanwhile, as low mortgage rates allowed a growing number of prospective homebuyers to make purchases, the National Association of Realtors recently announced in a report that pending home sales increased in November to the highest level seen in over a year-and-a-half.
The industry group's Pending Home Sales Index spiked 7.3 percent to a level of 100.1 in November. The previous month the level reaching 93.3, and is now 5.9 percent higher than the level recorded in November 2010.
It was indicated that the spike in pending transactions could be attributed to the revival of delayed sales.
"Housing affordability conditions are at a record high and there is a pent-up demand from buyers who've been on the sidelines, but contract failures have been running unusually high," said NAR chief economist Lawrence Yun. "Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage."
Regionally, the PHSI showed that pending transactions in the Northeast rose by 8.1 percent in November, while the Midwest saw pending sales increase by 3.3 percent. In addition, the South recorded sales rising by 4.3 percent, while the West saw pending home sales spike by 14.9 percent.
Meanwhile, a recent report from the Urban Institute showed that the rate of mortgage delinquencies continued its decline throughout 2011, but a revival in foreclosure proceedings could usher in more distressed properties flooding the nation's housing market in the new year.
"The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear," said Urban Institute research associate Leah Hendey. "At the current pace of foreclosure sales, we are looking at a process that could take decades to complete."
The report showed that the rate of delinquent mortgages in the 100 largest metro areas in the country fell to 3.7 percent in June, a significant drop from the rate of 5.5 percent recorded in December 2009 when the rate peaked. In addition, the Urban Institute found that the rate of seriously delinquent mortgages dipped to 9.3 percent from 10.4 percent during the same period.
