30 Year Mortgages Dive

Rates on 30-year mortgages dropped this week to the lowest level it’s been in the past few months.

Financial institutions viewed new evidence of a slowing economy as a sign that inflation will decline. Last Friday, the government reported that the overall economy, as measured by the gross domestic product, slowed down to a growth rate of 1.6 percent in the July-September quarter, the weakest pace it’s been in more than three years.

Chief Economist for Financial Management Company, Freddie Mac, Frank Nothaft, said, “Lower than expected third quarter GDP figures helped to put a damper on rising rates this week.” Nothaft said the lower mortgage rates could possibly trigger a spurt of refinancing by people who want to get out of adjustable rate mortgages that are scheduled to adjust upward over the next year.

For five consecutive years, home sales and construction of new homes have slowed down, and has been a major drag on the overall economy. Despite the cloud surrounding the housing market, The National Association of Realtors has announced the beginning of a series of newspaper ads proclaiming, “It's a great time to buy or sell a home.”

These ads will appear in newspapers beginning Friday, and note that mortgage rates have been falling recently, and the near-record level of unsold homes means that buyers have more homes to choose from. The ad quotes former Federal Reserve Chairman Alan Greenspan as saying that “most of the negatives in housing are probably behind us.”

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