According to the Freddie Mac (FRE) weekly survey of mortgage rates, mortgage rates fell this week, with the 30-year fixed rate mortgage averaging below 5%. The 15-year fixed rate lowered to 4.36% which marks the lowest rate since Freddie Mac began tracking mortgage rates in 1991. In comparison, the average rate was 4.46% last week and 5.78% last year. The last time that 30-year fixed rate mortgages were below 5% was in the week ending on May 28, when it dropped to 4.91%.
In order to obtain the rates mentioned above, the 30-year fixed-rate required a payment on average of 0.7 point, and the 15-year fixed and five-year adjustable required an average of 0.6 point. A point is considered 1% of the mortgage amount, charged as prepaid interest required to be paid prior to obtaining a loan.
The five-year Treasury-indexed
hybrid adjustable-rate mortgages also made a new record low, reducing to 4.42% from 4.51% and 6%. Yields on Treasuries rebounded from the multi-decade lows they hit earlier this year, but now they have since retracted again, taking mortgage rates with them in the decline. The Dallas Federal reserve President, Richard W. Fisher, warned that while housing is stabilizing, it was still “on life support”.
The Commerce Department’s data for August suggested that new home sales rose for the fifth month however existing home sales had an unexpected drop, breaking four months of incremental improvements.
In addition, the S&P Case-Shiller indexes showed that home priced increased in July, marking the second month in price increases.
The last time that 30-year fixed rate mortgages were below 5% was in the week ending on May 28, when it dropped to 4.91%.
In other news, New York’s new tax credit program for new home loan mortgages is taking off quickly, drawing attention from first-time home buyers it was designed to help. The credit for homebuyers offers the potential for qualifying individuals and families to save $30,000 or more over the life of their mortgage.
New York officials announced the tax credit in August, with the expectation that the program would boost the ailing housing and construction markets in the state. State officials already reported having 385 New York homebuyers applying for the benefits, and expect many more. Although mortgage brokers and realtors say many thinking about buying a home have been frustrated by the process of applying for the credit, citing complexities and income limitations.
Some of these complexities include requiring the bank to apply for the credit, and not the individual. In addition, if you live in a one or two person household with income over $74,100 you do not qualify for the tax credit. This also applies to those living in a three or more person household, where earnings are greater than $85,215.
Called the “New York State Mortgage Credit Certificate, it has little in common with the federal government’s credit for first-time buyers that offers new homeowners a tax rebate of up to $8,000. The federal credit is set to expire at the end of November.
The credit program offered by New York meanwhile, has no expiration date, and permits homebuyers to claim a tax credit of 20% of their annual mortgage interest for the term of the loan.
While a state effort, the credit is applied against a filer’s federal income taxes. This is made possible by an Internal Revenue Service rule that permits states to trade bonding authority for tax credits.