Mortgage Rates Hit 30 year Lows – Again

Just when you thought that mortgage interest rates were as low as they could go, they drop even lower making those in the industry wonder just when we will actually see the bottom. According to the weekly mortgage survey conducted by Freddie Mac , interest rates on 30 year fixed-rate mortgages averaged 4.85% the week of March 26th. This is down from last weeks average of of 4.98%. Rates for 15 year mortgages were averaging 4.58%.

Many critics say that even this drop is not enough to stimulate sales of new homes in the current economy. Tighter credit restrictions and buyer insecurity mean that even at the current low rates, home sales are unlikely to improve. Could we see mortgage interest rates as low as 3% in the next year? It has already happened for some IndyMac borrowers after the FDIC took control of the failing bank. Indeed, the Fed has been actively encouraging banks to lower rates for distressed borrowers in an effort to stem the rising tide of US foreclosures. Whether lowering the rates will have any effect on those borrowers already verging on foreclosure remains to be seen, but there is no doubt that low interest rates will encourage refinancing and stimulate home sales. All of which is great for customers and the economy but not so great for banks unless the rate changes signicantly prevent additional foreclosures.