As the housing market continues to stay stagnant, the federal government is coming up with new ways for on-the-fence buyers to sign up for a mortgage loan. The Federal Housing Administration (FHA) has already posted some historically low interest rates, but as it tries to attract more borrowers, the rates for long-term mortgages keep going lower and lower.
Lower Long-Term Mortgages From Feds
Freddie Mac reported long-term mortgage rates have decreased a little bit, with the average rate for 30-year fixed mortgages dropped slightly from 6.06 percent to 6.05 percent, below last year's average of 6.21 percent. The 15-year fixed loans went up a tiny bit from 5.59 percent to 5.6 percent. According to Freddie Mac vice president and chief economist Frank Nothaft, 'Mortgage rates remained almost unchanged based on better-than-expected economic data releases that indicated the economy still has some staying power.'
How Fed Mortgages Work
In order to qualify for the rates, borrowers have to pay points or fees that lenders charge for loan processing. Afterward, they can use it to secure the loan. While the rates are certainly attractive to the average borrower, home ownership has declined from 69 percent in 2006 to 67.8 percent at the beginning of the year.
'The housing market is still struggling amid falling house prices and stricter lending standards,' added Nothaft, '[because of] higher delinquency and foreclosure rates, a smaller share of families own their homes this year.'
Benefits Of FHA Guaranteed Mortgages
The FHA loans are issued by the Government National Mortgage Association, making them a more dependable source of information and trustworthiness than private lending companies. Those who have a decent credit history and three percent equity on their homes can qualify for a guaranteed mortgage. Borrowers can even get help from nonprofit organizations through the bank to cover the down payment. Despite the drop in home ownership and borrowers for new properties, the feds are working to make sure that potential buyers have the resources to feel confident about starting the search for a new home.
