Mortgage Rates Hit A Record Low, House Prices Still Fall

It was only a matter of time before the economic fall in Europe crossed the Atlantic and started to affect the US market

. The average 30-year and 15-year fixed-rate mortgages fell to the cheapest theyve been since 1985 having APRs of 4.96% and 4.34% respectively.

With these low mortgage rates, what economists and socialists assume will happen is house prices will go up because more people will be able to afford to buy. However, house prices fell in March from February. When you plan your family investments a mortgage is almost always put into the family budget. Making a house into a home does not come cheap, and mortgages help make families of all sizes afford making the transition. The low cost of mortgages should be pulling in families left and right into buying new homes, but due to the economic hardships of the past few years, many people are still reluctant to buy.

Some mortgage companies are so eager for family investments that theyve dropped their mortgage rates to 4.00% on a 15-year fixed-rate mortgage with no points!

How did this happen? The European loan uncertainty spooked everyone, even the US government and investors. When the US federal government decided to back mortgages; they made them a family investment that is almost guaranteed to pan out for you. Investors in the stock market or other loans did not have that assurance, which made them turn to Treasury bills and other debt guaranteed by the government. With all these people turning to advocate mortgages, their rates went down!

This in turn should make house prices go up, for as economics 101 tells us, the larger the supply, the lesser the demand. However, due to the severity of lower family incomes and uncertainty about family investments, people are still reluctant to buy homes. This has made the house market weak with Detroit and Chicago seeing the largest monthly decline of 4.1 and 2.3%.

Whereas all this sounds like a good thing, it is discouraging for American homeowners who have watched their assets deteriorate significantly over the last couple years. If the home prices dip again, families may have to curb their budget and make the balance our economy is currently in falter on the side of debt. For families struggling to pay their mortgages, falling home prices makes it even harder to refinance into an affordable home loan.

Visit us at: http://www.familyfinancesource.com/category/family-investment/ for Family Investment and Family Finance Source.

by: Andy McShane

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