Low Mortgage Rates Keep Housing Industry Up

Low interest rates are helping maintain housing affordability and thus boosting demand for housing. The 30-year fixed-rate mortgage averaged 3.54 percent.  The 15-year fixed rate averaged 2.74 percent.

Some of the recent increased demand has comefrom investors. Sales to first-time homebuyers remain below healthy levels. The inventory of homes for sale rose in February after dropping to a 12-year low in the previous month. The shortage is driving up prices as buyers seek to take advantage of low lending rates.

Home prices rose 10.2 percent in February compared with a year earlier, according to CoreLogic. The annual gain was the biggest since March 2006. Prices have now increased on an annual basis for 12 straight months.

This steady housing recovery has meant good things for mortgage guarantors Fannie Mae and Freddie Mac.

Fannie-Mae posted a record profit of $17.2 billion last year and Freddie-Mac made $11 billion for the year. With record low rates both Fannie-Mae and Freddie-Mac expect a solid year again in 2013.

One of the best pieces on mortgage related news is that since both Fannie-Mae and Freddie-Mac returned to stricter mortgage underwriting standards their default ratios are the lowest ever. That means that the new mortgage guidelines are making sure that fewer homes go into foreclosure due to non-payment of a motgage.

On the other hand, the Obama administration is complaining that not enough people with bad credit are able to obtain a mortgage. Is that just plain stupid. They want us to lower the underwriting standards again that got us into the mortgage meltdown of the last decade in the first place. Just proof that politics fails to use common sense.

Do they forget we already have the FHA mortgage program to help those that don’t meet the guidelines of Fannie-Mae and Freddie-Mac. FHA has to continue to raise it’s mortgage insurance premium to cover the losses from mortgage default from the borrowers that they have to foreclose on their mortgage for default payment.

Do we never learn from our mistakes? There is good reason that some people just need to rent. We really don’t need another mortgage bailout. Let’s ke

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