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Weak Economic Data Means Good News for Mortgage Rates

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MINOLTA DIGITAL CAMERAMortgage rates have retreated again in response to weak financial data and global economic concerns, according to a report released Thursday by the Federal Home Loan Mortgage Corp.   Specifically, the average 30 –year mortgage rate dropped to 3.6 percent.  In fact, mortgage rates have not been above 3.7 percent in the past 10 weeks.  This streak has allowed home buyers more time to take advantage of these historically low mortgage rates.  Consequently, loan application volume increased 9.3 percent from the previous week.

The drop in the mortgage rates is a direct result of a weak jobs report, which was released last Friday.    “Growing optimism about the state of the economy was quickly erased with May’s employment report,” Sean Becketti, Freddie Mac chief economist, said in a statement.  The article published in The Washington Post, by Kathy Orton, also details some of the global economic concerns which have had an effect on the direction of mortgage rates.

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Existing-Home Sales Continue to Rise

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According to an article published by the National Association of Realtors (NAR), the sale of existing homes nationwide has increased 6 percent since April 2015.  Additionally, the median home price for existing homes is up 6.3 percent since last April.   Although the total housing inventory is showing some upward movement, it is still lower than it was a year ago.FotoFlexer_Photo

Lawrence Yun, NAR chief economist, indicated “The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow.”

The supply of entry and mid-priced homes is still low and the market for these homes will likely be the most competitive in the coming summer months.  However, proposed changes to FHA condo rules could eliminate some of the obstacles that stifle condo sales.  These changes would allow more first time home buyers an opportunity to purchase a condo and enter the real estate market.

For more information, read the entire article.

 

Photo Credit: Marcel Suliman

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