Mortgage rates continue to hover near record lows with the rate on the benchmark thirty year flirting with 4.875% this week. The rate on the fifteen year fixed rate has dipped below 4.50% coming in at 4.375%. Thirty year rates on most government loan programs including FHA. VA and Rural Development have eased to 5%. Rates were helped this week after Federal Reserve Chairman Ben Bernanke gave a speech on Monday in which he cited “economic headwinds” as rationale for keeping rates low for the foreseeable future. Low interest rates helped keep the value of the dollar low against other major currencies and driven the price of gold to record highs in recent weeks as investors look for a safe alternative to the U.S. currency.
On Wednesday the Commerce Department reported that permits for new home construction tumbled 10.7% in October to their lowest level in six months to an annual rate of 529,000. The October housing starts were also 30.7% below the October 2008 figures. The numbers were also well below economist’s forecast that had expected housing starts to com in at 600,000 for the month. This was the second month in a row where housing starts did not meet analysts’ expectations.
On a brighter note, the National Association of Realtors reported last Friday that nearly half of all homes now being sold are to first-time homebuyers. NAR said that 47% of all new homes being sold are to first-timers. This is up from 41% in 2008 and up a whopping 11% since 2006. Most industry experts credit low home prices, low interest rates and the first-time homebuyer tax credit. That credit was extended last week through June 2010.