- Associated Press - Thursday, October 6, 2011

The average rate on a 30-year fixed mortgage has fallen below 4 percent for the first time in history.

For the lucky few with good jobs and stable finances, it’s a rare opportunity to save potentially thousands of dollars each year. For most people, it’s a tease and a reminder of how weak their own financial situation is.

On Thursday, Freddie Mac said the rate on the 30-year fixed mortgage fell to 3.94 percent from 4.01 percent last week, the previous low. The average rate on a 15-year fixed loan, a popular refinancing option, dipped to 3.26 percent, also a record.

Mortgage rates are now lower than they were in the early 1950s. The average rate reached 4.08 percent for a few months back then, according to the National Bureau of Economic Research, although mortgages at that time typically lasted only 20 or 25 years.

But superlow rates haven’t been enough to lift the housing market, which has struggled in recent years with anemic sales and declining home prices.

Rates have been below 5 percent for all but two weeks in the past year. Yet sales of previously occupied homes this year are on track to be among the worst in 14 years. And homeownership has dropped in the past decade by the greatest amount since the Great Depression, according to 2010 census data released Thursday.

“Considering how far mortgage rates have fallen, we’d expect to see more people refinancing and buying,” said Celia Chen, director of housing economics at Moody’s Analytics. “It’s still the lack of jobs and the difficult credit environment that’s pushing most people away.”

For many Americans, buying a house is too big a risk in this economy. Unemployment is above 9 percent, raises are scarce and millions of foreclosures are forcing down home prices.

Others can’t qualify for the historically low rates. Banks are insisting on higher credit scores, and many want first-time buyers to put down 20 percent. Few people have that much cash or home equity to satisfy the requirement.

“There’s a huge pile of applications we’re rejecting because of low credit scores. It’s been that way for years,” said John Stearns, a senior mortgage banker at American Fidelity Mortgage outside of Milwaukee.

Copyright © 2017 The Washington Times, LLC.

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