If you are considering a home purchase or a refinance, you are probably doing your best to follow the direction of mortgage interest rates. Well, rates on 30-year mortgages climbed for the second straight week, even though they are pretty close to the lowest level in decades.

The average rate for 30-year fixed loans this week was 4.37 percent, mortgage buyer Freddie Mac said Thursday. That’s up from 4.35 percent a week earlier and 4.32 percent the previous week, which was the lowest level on records dating back to 1971.

The average rate on 15-year fixed loans dropped to 3.82 percent. That was the lowest on records dating back to 1991 and was down from 3.83 percent last week.

For mortgage rates to move lower – we need more bad news in regards to the Economy… Rates have been at or near the lowest level in decades since spring as investors worried about the state of the economy and then moved money into safe Treasury bonds.  That lowered the bond yields, which mortgage rates tend to track.

But recent economic data have given investors less reason to worry. First-time claims for jobless benefits have fallen in three of the past four weeks. And in August retail sales rose modestly and factory output grew for the 12th time in 14 months. The CPI numbers out today indicate that we have little to any chance of Inflation, generally seen as good news.  The “Zero” inflation status allows some room for the Fed to make some slight moves at it’s meeting next week, allowing the Fed Balance Sheet to grow.

Even thought the improving economic outlook may have prompted some investors to pull their money out of the bond market and put it back into stocks.

But it hasn’t helped the housing market, nor have low mortgage rates. Home sales plummeted this summer and economists don’t expect that to change until the unemployment rate falls significantly and credit becomes more accessible to potential buyers. Applications for new home loans fell by nearly 9 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday.

Meanwhile, foreclosures are surging. Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis, foreclosure listing firm RealtyTrac Inc. said Thursday.  In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.

In all, it’s going to take a Congress and the “new” bank regulators deciding on a course of action that is consistent to – coupled with JOBS to fix the housing problem.  One of my competitors said this week in a Rotary Meeting their Economist expect rates to go to 2% by the end of the year.  Really?  I’m not seeing it.  If this is true… we are in a WORLD of trouble!

To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.55 percent, down from 3.56 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.4 percent from 3.46 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year and 1-year mortgages. The average fee was 0.6 of a point for 15-year and 5-year mortgages.

If you are considering a purchase or a refinance in NC – call Steve and Eleanor Thorne.  We have the best rates and the lowest fees available, and we are WATCHING the economic conditions… not just repeating what someone else is saying!