Although the average 30-year fixed-rate mortgage has been below 4% almost every week this year, experts say few home owners or buyers qualify for that rate.
Using data from CoreLogic, The Los Angeles Times calculated that about 69% of home owners who had mortgages as the second quarter of this year ended had rates of 5% or higher, and about a third of those owners had rates above 6%.
Fed’s taking steps to encourage lower mortgage rates? Economists say those actions may have limited results if these low rates continue to stay out of reach for many home owners. “The irony is the people who need the help the most have not been helped — the people who are underwater,” says Nobel Prize-winning economist Joseph Stiglitz.
Many industry observers agree that lower mortgage interest rates would free up income for underwater home owners and thus stimulate the economy. Along with the Fed’s recent action, some bills have been introduced into the U.S. Senate with the aim of assisting both home buyers and home owners interested in refinancing, but may linger as the November elections approach.
Source: “Two-thirds of Americans with mortgages pay 5% interest or higher,” The Los Angeles Times (9/18/2012)