Mortgages rates set record low-second week in January 2012

Fixed mortgage rates fell once again to a record low. FreddieMac said Thursday the average rate on the 30-year fixed mortgage fell to 3.89 percent. The previous record of 3.91 percent had been reached three weeks ago. The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

This may offer  a great opportunity for those who can afford to buy or refinance homes. Unfortunately few are able to take advantage of the historic rates. The Mortgage BankersAssociation reported that new mortgage applications have fallen slightly on a seasonally adjusted basis over the past four weeks despite the record new low rates.   High unemployment and low wage gains have made it difficult for many people to qualify for loans. And some who do qualify are feeling guarded about jumping in and committing to a large purchase such as a home. 

 We need for unemployment to drop significantly before the lower mortgage rates will can positively impact the real estate market. Mortgage rates decreased because they track the yield on the 10-year Treasury note, which fell below 2 percent. Treasury notes could fall even lower this year if the Fed partakes on another round of bond purchases as some economists predict.