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Low rates keeping homes affordable

WASHINGTON – Sept. 8, 2009 – Falling interest rates are fueling a rise in home mortgage applications and refinancings in the Inland region, though experts aren’t yet ready to declare the beleaguered local housing market on the road to full recovery.

Virginia-based Freddie Mac, a government-backed corporation that provides mortgage capital to lenders, released a study Thursday showing 30-year fixed-rate mortgages averaging 5.08 percent, down from 5.14 percent a week ago and 6.35 percent a year ago.

“Bond yields pushed mortgage rates slightly lower this week,” Freddie Mac chief economist Frank Nothaft said in a statement. “Low mortgage rates are helping to keep housing very affordable.”

According to the National Association of Realtors’ housing affordability index, seven of the top eight most affordable months occurred during this year. Pending sales of existing homes rose for the sixth straight month in July, the association reported.

A Thursday check of Bankrate.com, which tracks lending trends, showed Inland rates for a 30-year fixed mortgage ranging from 4.5 to 5.75 percent. Rates assume a 20 percent down payment, and lenders are maintaining strict credit standards, according to Bankrate.

Bankrate this week released a study indicating closing costs on home purchases have recently dropped to 2007 levels, another reflection of pricing shifts in the national housing market.