Here are some percentages courtesy of USA Today’s article covering the mortgage rates:
Mortgage Rates Fall To Lowest Level Since The 50’s |“The average rate for a 30-year fixed mortgage fell to 4.12%, from 4.22%, Freddie Mac said Thursday. That's the lowest level on records dating back to 1971.Freddie Mac says the last time rates were cheaper was 1951, when most home loans lasted just 20 or 25 years.The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33% from 3.39%. That's the lowest on records dating to 1991 and likely the lowest ever, according to economists.”
http://www.usatoday.com/money/economy/housing/story/2011-09-08/Mortgage-rates-fall-to-lowest-level-since-1950s-few-qualify/50319086/1Even though mortgage rates are astronomically low sales of new homes are on their way to breaking a low that dates back 50 years. Resales aren’t looking to good either as they should be the worst in 14 years. What is happening?
It’s really not rocket science, just because mortgage rates drop, people are still unemployed and no one is getting raises. Folks are piling up insurmountable debts, and purchasing a new home isn’t even anything they would consider no matter what the mortgage rates.
The few out there that do want to take advantage of these low mortgage rates can’t qualify for bank loans.
USA Today breaks it down like this:
“Banks are insisting on credit scores above 700 and 20% down payments for first-time buyers. Many repeat buyers have too little equity in their homes to meet loan requirements. Roughly 40% of U.S. households have the necessary credit scores to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac, or FICO, data. But that's not the chief reason people aren't buying homes or refinancing.Just half of Americans say they'll ever be able to save enough money for any type of down payment, let alone 20%, according to a survey by the National Foundation for Credit Counseling.Nearly a third of homeowners have nearly zero equity in their homes or are underwater on their mortgage, owing more than the house is now worth, according to the real estate research firm CoreLogic. That leaves then unable to refinance because of lender-imposed limits and the cost of extra fees.”
Mortgage Rates Fall To Lowest Level Since The 50’s | AMPS
The real estate market will not correct itself if we continue to follow the failed strategy of relying on banks to lend. As the article above clearly details, it's just not going to happen. When something isn't working, you must adapts your strategy to something that is working. The best post-bubble real estate strategy working in today's marketing is called the Assignment of Mortgage Payments System.
The assignment of mortgage payments system helps sellers sell their 'unsellable' house to 'unloanable' buyers by utilizing owner financing. When homeowners sell their houses to buyers who don't qualify for conventional financing due to the strict lending policy of banks, it allows a real estate transaction to occur at market price.
This type of real estate transaction is a 'win' for all parties involved. The home owner is able to sell his or her house without having to come out of pocket to pay closing cost, without going into foreclosure and ruining their credit. The buyer is able to purchase a home they otherwise would not have been able to. The bank, private mortgage insurance company, and HOA are all still receiving money on a performing note. The neighborhood is not seeing it's values decreasing due to a foreclosure. Plus, fewer abandoned houses lead to less crime. State governments will continue to receive property taxes. Finally, tax payers don't have to watch their government waste tax dollars on failed housing plans.
Solving problems is the key to correcting the economy and the housing market. Record low mortgage rates aren't going to fix the housing market; providing a common sense solution to the challenges facing home sellers and home buyers will. It's time let the free market do what it does best by utilizing owner financing and the assignment of mortgage payments system.