Significant drop to 4.29% for U.S. Mortgage Rates on long-term standard loans

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As the number of Americans who apply for home loans is going down, mortgage rates in the U.S. have dropped too, creating better conditions for financing a home purchase.

According to a statement today from Freddie Mac (FMCC), this week’s average rate for a standard, long term FRM was 4.29%, decreasing from 4.33%. The McLean, Virginia-based mortgage-finance company  also reported a slip of the average 15-year rate from 3.39% to 3.38%.

Home loan prospects have been fewer and fewer given the tight credit requirements and the rising real estate prices. The total number of home loan applications dropped by 4.4%, in the week ending April 25.  According to the data from the Mortgage Bankers Association, this is the lowest figure in years, 21% below the level of the same month, a year before.

Bill Banfield, vice president at Detroit-based lender Quicken Loans Inc. spoke of a reluctance in home buyers to apply for loans despite the steady improvement of interest rates. Even if the figures are disappointing for lenders, consumers could enjoy this honey and milk period of historic lows. Buying a house may have never been easier in over 20 years or more.

The year began with an average of 4.53% interest rates for 30-year fixed mortgage, progressively declining to the current 4.29% low.

After the weather-induced stall, the economy is gradually recovering, as shown by the The Federal Reserve in yesterday’s statement. This could cause changes in the stimulative efforts that have generated the low levels of the interest rates. The central bank reduced monthly bond purchases to $45 billion, a  straight $10 billion cut, following three other similar ones. Further reductions in “measured steps” are in the offing.

The fall continued for a third month in a row for completed sales of previously owned U.S. homes. According to the National Association of Realtors, the sales level in March was the lowest since July 2012. Commerce Department figures further showed last week that new home purchases tumbled to an eight-month low.

Home loans (USPHTMOM) for the purchase of existing homes had the highest increase in almost three years, this March, proof that the market is stabilizing. The Realtors group declared three days ago that this situation is specific for the spring selling season.

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