Mortgage rates held steady this week, Freddie Mac’s survey of lenders showed, with the 30-year fixed-rate loan at an average of 3.53% for the third week in a row – a great deal for those able to take advantage.
The average rate for a 15-year fixed mortgage was 2.77%, the same as last week, the big mortgage finance company said Thursday.
Freddie Mac, the giant government-supported buyer and guarantor of home loans, asks lenders each week for the terms they are offering to well-qualified borrowers. In the latest survey, these borrowers would have paid 0.8% of the loan amount in upfront fees to lenders.
The mortgage rates, up only slightly from their record lows of about 3.35% late last year, are helping to stimulate demand for housing, pushing home prices higher in a wide variety of markets. The largest fourth-quarter gains were recorded in Phoenix, Detroit and San Francisco, noted Freddie Mac’s chief economist, Frank Nothaft.
But Freddie Mac’s definition of who qualifies for the low rate underscores how unattainable they may be for some would-be home buyers. The survey assumes borrowers have high credit scores and 20% down payments, excluding many Americans who are struggling to get back on a firm footing after the recession.
The traditional provider of low down-payment loans for first-time buyers and those with credit dings has been the Federal Housing Administration. But the FHA, which charges fees to borrowers and insures lenders and investors against losses on their loans, has been tightening its standards in reaction to its losses on housing-bubble loans.
The pendulum has swung too far, said Steve Zuckerman, California managing director for Self-Help, a community development lender that operates credit unions in lower-income neighborhoods.
In 2007, 80% of all FHA home loans were made to people with credit scores under 680, compared to 50% today, Zuckerman said. The FHA theoretically provides loans to people with credit scores in the 500s, but FHA mortgages to folks with scores of 620 or lower have dropped to just 5% of all FHA-insured loans, down from 50% on 2007.
That means the low rates are “affordable but not accessible” to large numbers of Americans, Zuckerman told a housing conference this week in Oakland. “Low-income families are having an incredibly difficult time taking advantage.”