Mortgage Rates Hit Record Lows-Again
July 23, 2010
As mortgage rates fell to a record low for the second straight week at the end of June, Congress passed two key extensions that will provide some stability for the housing market this summer.
Lawmakers extended the closing deadline for the first-time home buyer tax credit and reauthorized the National Flood Insurance Program, both to Sept. 30.
The tax credit change gives home buyers who completed a sales contract by April 30 more time to complete the deals. Many homeowners risked losing the tax credit because delays jeopardized their ability to meet a June 30 closing deadline.
"We know that up to 180,000 home buyers eligible for the tax credit are rejoicing this morning," association president Vicki Cox Golde said the day after the Senate approved both extensions.
One reason for delays was expiration of the National Flood Insurance Program on May 31. The National Association of Realtors said about 1,400 sales were delayed each day the flood insurance program was out of business. Many people in flood-prone areas can't get insured without the program. The insurance extension retroactively applies to flood insurance applications filed in June while the program was in limbo.
Mortgage Rates Drop Again
Meanwhile, average 30-year fixed mortgage rates dropped to 4.58% the week ending July 1, another record low, according to Freddie Mac. The 15-year fixed mortgage rate averaged 4.13%, and the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.79%, also record lows.
As expected, pending home sales dropped like a stone in May, the first month after the sales contract deadline for the home buyer tax credit. The National Association of Realtors' Pending Home Sales Index plunged 30% in May over April and almost 16% from May 2009.
