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Thursday, September 17, 2009

30-Year Mortgage Rates Fall to 5.04%

By Dunstan Prial

FOXBusiness

Mortgage rates for 30-year fixed U.S. home loans fell for the third consecutive week, another factor stoking belief that the housing market is poised for a rebound.

The average 30-year rate dropped to 5.04% from 5.07%, according to data released by loan buyer Freddie Mac. Thirty-year mortgages are the most popular type of home loan. The 15-year rate averaged 4.47%.

Demand is slowly growing as home prices continue to fall and buyers take advantage of a government tax credit.

Meanwhile, Federal Reserve Chairman Ben Bernanke said this week that the worst U.S. recession since the 1930s appears to be over.

Bernanke’s Federal Reserve has been instrumental in drumming up housing demand via lower mortgage rates through the Fed’s program to buy bonds backed by home loans. The size of the program surged to $1.25 trillion in March.

Credit markets virtually froze a year ago following the collapse of banking giant Lehman Brothers. The Fed set about pumping liquidity back into the markets in an effort to get banks lending again.

The secondary market for mortgages was specifically targeted by the Fed. Their efforts helped drive mortgage rates to a record low of 4.78% twice in April.

Homebuilders such as Hovnanian Enterprises (HOV) and Beazer Homes USA (BZH) rose Thursday on an array of positive housing data.

But problems remain. Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month in August as job losses left many homeowners unable to keep up with their mortgage payments, according to property data service RealtyTrac.

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