Despite low mortgage rates, traditional homebuyers are still reluctant to purchase residences, even low-priced ones under foreclosure listings. Although cash buyers and investors are taking advantage of the low prices of distressed properties, housing sales still failed to gain traction, with sales of existing dwellings and housing starts continuing to decline.
Housing analysts are hoping that further drops in mortgage rates during the third week of March will encourage more buyers to purchase single and multi family foreclosures and non-foreclosed dwellings. Rates for fixed mortgages declined during the week, while the 15-year mortgage declined from 4.15% to 3.97% in the third week of March, the first time in a full quarter that rates for such loans have gone below 4%.
According to housing market analysts, buyers of new homes and repo houses for sale are set to benefit from low mortgage rates in the coming weeks. They stated that rates are influenced by U.S. Treasury bonds which have declined following the disaster in Japan. Meanwhile, the rate for 30-year fixed loans also plummeted, dropping to 4.76% from 4.88% the week before. In November of last year, fixed loan rates recorded their lowest levels at 4.17% in 40 years. Analysts are expecting rates to remain low as Treasury bonds continue to drop.
However, most housing industry analysts are reluctant to predict that the drop in mortgage rates will encourage more purchasing activities in the non-foreclosed home market and in foreclosure listings since it has failed to do so in the past. Even during times when rates are starting to go down and prices of homes are plummeting, buyers were reluctant to enter the market and new home builders continue to suffer from weak demand.
The home building market took the worst of the impact of tepid demand, with housing starts also suffering from competition posed by low-priced distressed property for sale and foreclosures. In February, house construction activities declined to their lowest points in nearly two years, while home building permits dropped to a 50-year low. Homebuilders have stated that the recent drop in mortgage rates is unlikely to improve demand for new homes.
They stated that high supplies of foreclosure listings and restrictions in the lending market are preventing people from purchasing new residential properties. In addition, builders believe that the massive declines in property values are scaring people off from home buying, while majority just simply do not have the means to purchase due to unemployment.
www.eforeclosuremagazine.com
