Mortgage Rates Drop — HSH on WSJ Front Pageby Tim Manni
Yesterday’s actions by the Federal Reserve sent mortgage rates down to levels unseen since February of this year. According to HSH, the conforming 30-year fixed rate dropped to 5.77% from 6.06% on Monday, the largest single-day drop since September 8 of this year when the Fed announced Fannie Mae and Freddie Mac would be put into conservatorship.
From the front page of the Wall Street Journal:
“This is a win-win,” said Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School. “It will directly increase demand for housing and help with the downward spiral in home prices.”
Falling mortgage rates have historically been able to bring potential homebuyers out of the wood work. Yet, if home prices still do not stabilize, we may not see the improvement it so desperately needs. If Ms. Wachter is right, and the current drop in mortgage rates added with the Fed’s latest initiatives can begin to curtail falling home prices, we may start to see a positive turnaround in the housing market.