For the first time in three weeks, mortgage rates have fallen increasing the chances of stabilization in the housing market.
The mortgage rate had been stable since 30 years and dropped to 5.22 percent from 5.25 percent. It is expected that new lower rates may increase demand for homes in the fourth year of the housing recession. Sales of new and existing homes increased in June as falling prices and a government tax credit attracted buyers. The home price index rose 0.5 percent in May from the prior month, the first gain since July 2006.
Ben S. Bernanke who is the Federal Reserve Chairman is trying to lower loan costs with a program to purchase securities backed by mortgages.
According to the Commerce Department, the new home sales jumped 11 percent in June, which is the biggest gain in eight years as homebuilders reduced prices. The median price fell 12 percent to $206,200 from a year earlier. And according to the National Association of Realtors, Sales of existing homes rose for a third consecutive month in June, said July 23.
Home resales reached the highest level since October and climbed 3.6 percent to an annual rate of 4.89 million according to the National Association of Realtors. Median prices fell 15 percent to $181,800 from a year earlier.
As a result of the lower interest rate, the Mortgage Bankers Association’s index of home loan applications increased 4.4 percent in the week ended July 31. the applications for Purchase rose to 0.9 percent and requests to refinance rose 7.2 percent.
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