Mortgage rates continue to decrease.  A 30 year fixed rate came through at 4.76% and 15 year fixed rate settled at 3.97%.

These rates are amazing!  When I locked in close to two years ago at 4.875, I didn’t think that rate would be around very long, much less, go lower.

Here we are almost two years after my purchase, and in my opinion, this country is still facing the same challenges.  Most people have strong opinions about how housing got to where it is today.  About four or five years ago, I announced my thoughts, and stick to them to this day.

When the housing market crashed, I think we can all settle on the fact that home owners simply couldn’t afford their payments in the first place.  You can pass the blame on the banks for issueing the loans, or take the personal accountability route and blame it towards the borrower.  Either way, I don’t think the borrowers could afford the payments in the first place.  Of course in return, we get the wave of forclosures.

So why after a few years, are we still experiencing the same issues?  The housing market is flooded with vacant homes, why aren’t people buying?  Well, on the surface we have high unemployment so those buyers are taken off the table.  Most folks that are well off, more than likely have already settled somewhere.  That leaves the poor and middle class.  The issue with these groups, is they still sipmly can’t afford a home.  The remainder of the market is simply waiting for homes to come down in price enough to meet their needs.  Until then, nothing will change.

To be honest, I thought rates would have been raised by now.  Once Fannie Mae and Freddie Mac stopped buying mortgages, I didn’t think there would be anyone left to borrow money at such low rates.  I was wrong.  Since the rates have stayed around 5% for a 30 year fixed rate, the only answer is lower home prices, or I suppose even lower rates, but I don’t see that happening.  There simply won’t be enough incentive to borrow the money out.

Hopefully, the market returns and stabilizes shortly, however, I think we’ve got a long road ahead.