Low Mortgage Rates Fuel Demand For Homes

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Despite the bad job market, demand for U.S. home loans rose last week for the third straight week. An industry group says home ownership is being helped by low mortgage rates, which fell again to a one-month low. They're below 5 percent in some areas for 30 year fixed rate loans.

RENEE MONTAGNE, host:

Home mortgage rates are falling again. They're back down to historically low levels.

NPR's Chris Arnold has more.

CHRIS ARNOLD: The lower rates have the phones ringing again at mortgage broker offices and the number of new loans being written has been rising for the past three weeks.

(Soundbite of radio ad)

Unidentified Man: Listen, if youve waited until now, this is your second chance to capitalize on some of the lowest rates in a generation. We can save you a fortune with this deal. It's the biggest no-brainer in the history of Earth.

ARNOLD: That's a radio ad for the mortgage company Lenox Financial, and that many people actually have been able to refinance their home loans and save hundreds of dollars a month.

Guy Cecala is the publisher of the Inside Mortgage Finance.

Mr. GUY CECALA (CEO and publisher, Inside Mortgage Finance): The record low mortgage rates weve seen over the past year aren't over yet. Rates are continuing to bounce around near five percent or even under, and it's a great time to go shopping for a home, particularly with a lot of distressed properties on the market, home prices are down.

ARNOLD: Still, many Americans can't qualify for those super loans rates.

Mr. CECALA: Mortgage underwriting is still extremely tight, the tightest weve seen in 20 or 30 years.

ARNOLD: Cecala says most loans being written lately are for people with an average credit score of around 760. That's a sterling credit score, and he says the people without that kind of credit score are having trouble. And he says a lot of other people dont have enough equity in their house to qualify for the low rates.

Chris Arnold, NPR News.

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