Mortgage rates drop to new low

July 9, 2010 at 12:00a.m.

Associated Press

NEW YORK

Mortgage rates fell for the second-straight week to the lowest point in five decades. But many people either don’t qualify for new mortgages or already have taken advantage of the low rates this year.

As a result, the housing market and the broader economy may not benefit much from the lower rates.

The average rate on a 30-year fixed mortgage dropped to 4.57 percent this week, mortgage company Freddie Mac reported Thursday. That’s down from the previous record low of 4.58 percent set last week.

It’s the lowest since Freddie Mac began tracking rates in 1971. The last time rates were lower was in the 1950s, when most long-term home loans lasted just 20 or 25 years.

Rates have fallen over the past two months. Investors, concerned with the European debt crisis, have poured money into the safety of Treasury bonds. Treasury yields have fallen and so have mortgage rates, which tend to track yields on long-term Treasurys.

However, low rates have yet to fuel home sales. The housing market has slowed since federal tax credits for homebuyers expired at the end of April. And the latest decline in mortgage rates is unlikely to boost the market.

Mortgage rates have hovered near record lows for some time, so most people who can afford to buy homes or qualify to refinance their loans already have done so in the past 18 months. Doing so again wouldn’t be worth the cost for most.

Meanwhile, millions of Americans are unable to take advantage of the low rates. Many have seen the value of their homes plummet and have little or no equity. Or they lack good credit or steady income to get or refinance a mortgage.