|
|
Lowest
Mortgage Rates in Decades
Mortgage
rates dropped to the lowest level in decades this week, and home
affordability is very favorable. Uncertainty about the
extent of global economic growth and continued low inflation levels have
helped mortgage rates reach these levels.
After
months of debate, Congress reached agreement on the Financial Reform bill,
and it is expected to pass next week. The bill includes many provisions
which will affect mortgage lending and the home buying process, but the
impact will not be fully known for some time as many of its changes are
subject to regulatory discretion. Separately, the larger bill containing an
extension to the home buyer tax credit "close-by" deadline failed
to pass this week. Lawmakers will continue to debate the bill, but it
appears unlikely that the "close-by" deadline will be changed
before the current June 30 deadline is reached.
The
performance difference in this week's two housing reports was stark, but it
was mostly due to measurement methods. May Existing Home Sales fell 2% from
April, and were up 19% from one year ago. May New Home Sales dropped 33% from April, which was about 13% lower than
one year ago, and a record low level. There's an important difference
between the two reports, though. Existing Home Sales measure transaction
closings, while New Home Sales are based on contract signings. The April 30
contract signing deadline to receive the home buyer tax credit pulled many
contract signings forward into April, and some of these deals closed in
May. As a result, Existing Home Sales were still boosted by the tax credit
in May, while New Home Sales were not.
|
