Mortgage rates continue to hover near historic lows, making homeownership more affordable for a large number of prospective buyers.
According to Freddie Mac’s most recent Primary Mortgage Market Survey, positive reports regarding the nation’s housing market and economy has prompted rates to remain stable below 4 percent for five consecutive weeks.
“Fixed mortgage rates started the year a little lower this week just as recent data reports indicate the housing market and manufacturing industry are showing signs of improvement,” said Freddie Mac vice president and chief economist Frank Nothaft. “Pending existing home sales in November jumped 7.3 percent, nearly five times greater than the market consensus forecast, to its strongest pace since April 2010.”
The government-sponsored enterprise indicated that the rate for a 30-year fixed-rate mortgage during the week ending January 5 averaged 3.91 percent, edging lower from the previous week when it averaged 3.95 percent. However, at the beginning of 2010, the rate averaged 4.77 percent.
Meanwhile, the average rate for a 15-year FRM fell to 3.23 percent from 3.24 percent a week earlier. Last year at this time, the rate averaged 4.13 percent.
However, despite the affordable rates, the National Association of Realtors recently applauded the Federal Reserve Bank’s call for industry changes to increase lending and allow more mortgage modifications.
According to the NAR, repairing the nation’s housing market is a key factor behind fixing the broader economy.
“As the nation’s leading advocate for homeownership and housing issues, NAR knows that a strong housing market recovery is key to the nation’s future economic strength,” said NAR president Moe Veissi. “Improving access to affordable mortgage financing for qualified home buyers and investors and aggressively pursuing more loan modifications and short sales is necessary to help reenergize the housing market and spur an economic recovery.”
Veissi also noted that a growing number of qualified borrowers are unable to receive financing even though it’s clear they will be able to afford the monthly payments. Subsequently, he called for more financing opportunities for prospective homeowners that could help thin out the distressed properties inventory.
Additionally, to reduce this inventory, NAR has called on lenders to provide more refinancing opportunities to current homeowners who are delinquent on their mortgages. By modifying monthly payments, more borrowers will be able to stay current, reducing the impact of foreclosures on home prices.
Meanwhile, a recent forecast from Veros Real Estate Solutions anticipates home prices to remain relatively flat during the new year.
The report from the real estate analytics firm indicated that home prices could fall by 1.3 percent overall by the end of 2012. However, despite the overall minimal change, the report suggested that some of the nation’s strongest housing markets could see home prices increase by as much as 4 percent, while the weakest markets could see home prices fall by an estimated 6 percent.
State-by-state, the report indicated that the greatest home price appreciation may be seen in Iowa, Nebraska, North Dakota, South Dakota and Texas.
On a local level, home prices in Fargo and Bismarck, North Dakota, are expected to increase by 3.5 and 3.3 percent, respectively.
In contrast, Veros anticipates high levels of unemployment, foreclosures and mortgage delinquencies to have a severe impact on home prices in Bakersfield, California, where prices could depreciate by as much as 6.8 percent. In addition, home prices in the Reno-Sparks, Nevada area could fall by an estimated 5.7 percent in 2012.
