Fixed home mortgage rates fall to lowest level this year

June 2, 2011

Cityroom and AP Wires

(File/WBEZ)

Fixed mortgage rates slid for the seventh consecutive week to their lowest levels of the year.

Freddie Mac says the average rate on the 30-year loan fell to 4.55 percent from 4.60 percent. The average rate on the 15-year fixed mortgage, a popular refinance option, slipped to 3.74 percent from 3.78 percent.

Rates tend to track the yield on the 10-year Treasury note, which has dropped over fears about a lull in the economic recovery.

However, the low rates have done little to lift the struggling housing market.

Most people are unable to take advantage of the lowest mortgage rates because of tougher lending requirements. And those who could afford to refinance likely did so last year, when rates fell to the lowest levels in decades.

Sales of new and previously occupied homes rose in April. But sales are well below healthy levels. Waves of foreclosures have pushed prices down. Many would-be buyers are holding off, worried that home prices have yet to hit bottom.

Home prices fell in the first three months of this year to the lowest levels since before the housing bust. Prices are expected to keep falling until the glut of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes sense again to buy a house. In some markets, that could take years.