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Mortgage Rates And American Housing in 2012

On January 12, 2012, Freddie Mac released its latest survey on current mortgage rates around the United States. The result, not too surprisingly, was that rates had fallen again from last week (and late 2011) to 3.89% for a 30 year fixed – two basis points below the first week of the year.

The best mortgage rates are still found out West, where states like Nevada and California were hit hardest of any by the latest housing bust. At 3.85% for a 30 year fixed, the region is five basis points below the national average. The Southeast and Southwest portions of the U.S., meanwhile, are between 5 and 6 basis points above the average.

Current mortgage rates have been falling for quite some time now as demand for housing has been slow to pick up. Some economists and real estate experts are claiming that the housing market is “bouncing along the bottom”, and prices (along with mortgage rates) are set to rise in the future. These claims, however, aren’t the consensus among everyone.

In their most recent forecasts, housing industry insiders and banks involved in the real estate market anticipated that little price change will occur in 2012. Consequently, one can expect mortgage rates to stay effectively the same, and perhaps even fall slightly in the near term. The overall economy’s recovery seems to reflect the housing market’s recovery, in that it’s been slow and sometimes even mixed thus far.

The reason for this sideways movement, many suspect, is that there are two major forces working in opposite directions on the market. Starting with the negative, there is still a large backlog of houses in the foreclosure process. Market participants suspect that mortgage-holding banks are prolonging the process, waiting for a turn in house prices before they take hold of and resell the homes. This anticipated boost in future supply could be suppressing current prices and creating the best mortgage rates for home buyers in history. On the other hand, the Mortgage Banker Association’s mortgage application index has been ticking upward in recent weeks, indicating that demand for home ownership may finally be on a rising trend.