Mortgage Rates Drop to 4.8% as Unemployment Rates Remain High

by Donald Hanz on Foreclosures

The real estate market has received some decent news over the last few days, with everything from an increase in home loan applications to a rise in home construction. Today’s reports indicate that 30-year fixed mortgage rates are down to 4.80%, which could potentially convince buyers to continue the slow increase in home purchases across the country. However, low rates alone are not enough to spark a housing market recovery, as the rates have bottomed out at 3.57% last November with little effect on the market.

Many people, especially investors, are looking into foreclosure homes for their next big purchase. These properties have provided buyers and investors alike with the opportunity to get great prices on homes that need only slight repairs to be livable or rentable. Those that are investing in the real estate market are glad to hear about the low home prices and lending rates, but these decreases alone have not sparked a huge change in the real estate arena.

Another factor contributing to the little improvements in real estate is the still high unemployment rates, with claims at 403,000 last week. The job market is improving, but the progress is incredibly slow—leaving many people disappointed. Without jobs, people are unable to purchase homes and therefore tend to rent. New home purchases puts money back into the local government and can stimulate job growth, while renting does not improve the unemployment rate. This unending cycle has both the unemployment rate and real estate market in a bind.

All of this information shows progress in the real estate arena and economic recovery; however, the progress is limited in the real estate market (especially residential) and will take a long time to return to stability.