Mortgage Rates Falling Again

After rising steadily over several weeks, mortgage interest rates appear to be falling again -- lowering the cost of buying a home.

In its weekly report, Freddie Mac said the average rate on a 30-year fixed rate mortgage fell below five percent this week, to 4.95 percent. The rate was percent last week and 5.05 percent a year ago.

"Fixed mortgage rates eased again this holiday week amid mixed inflation data reports," said Frank Nothaft, chief economist of Freddie Mac. "Although the core consumer price index for January rose slightly above the market consensus, house prices fell 4.1percent in the fourth quarter of 2010 compared to the same period in 2009, according to the S&P/Case-Shiller National Index. In addition, the level of the index was the lowest since the fourth quarter of 2002."

Higher elsewhere

The average rates were higher in LendingTree's Weekly Mortgage Rate Pulse, a snapshot of the lowest and the average home loan rates available within the LendingTree network of lenders.

On February 22, average home loan rates offered by LendingTree network lenders were 5.16 percent for 30-year fixed mortgages, 4.37 percent for 15-year fixed mortgages and 3.87 percent for 5/1 adjustable rate mortgages (ARM).  Rates for all loan types fell from last week's averages.

"While overall consumer confidence is rising, we expect housing numbers will show that confidence doesn't translate to the housing market," said Cameron Findlay, LendingTree Chief Economist. "S&P/Case-Shiller results indicate we are on the precipice of a double dip in housing, and we're forecasting existing and new home sales to show month-over-month declines. That said, home ownership remains affordable with mortgage rates continuing to hover around five percent for a 30-year fixed loan. But with government reform of Fannie Mae and Freddie Mac on the horizon, don't expect that affordability to last."

Home sales

The latest home sales numbers show mixed results in home sales in January with lower prices. An increasing number of home sales are foreclosures and an increasing number of buyers are investors, who are paying cash. Nearly one third of existing home sales last month were paid for in cash, according to the National Association of Realtors.

This morning, the Commerce Department reported sales of new homes were down 12.6 percent in January to a seasonally adjusted annual rate of 284,000 units. At the same town, the December sales rate was revised downward to 325,000 units. The government also reported the median sales price for a new home dropped 1.9 percent from December -- to $230,600.