Rates Draw Down

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.25 percent, down 0.17 percentage point from the previous week, their lowest since the week ended May 18 when they stood at 6.23 percent. Interest rates were also below year-ago levels at 6.32 percent.

Yields on 10-year U.S. Treasury notes, which are linked to mortgage rates, fell last week for a fourth straight week to a 19-month low as investors grew more confident the Federal Reserve will cut benchmark rates at its policy-making meeting on September 18. Yields move inversely to price.

A fall in interest rates is providing some good news in what has been a rough summer for real estate. Mortgage applications are up from a year ago for the past two weeks since the Labor Day holiday, though some speculate that borrowers are just filing more applications in case one or more don't come through. Also, the recent numbers are only for retail lenders and don't take into account wholesale lenders or mortgage brokers, both of which have represented a significant percentage of loan originations during these past few years.

But good news is good news. A few weeks ago, we were calling for a short term top in mortgage interest rates and it seems like we were right on. Expect rates to be no higher than they are now for the next six months as the real estate and financial markets sort things out.

Just be careful about the loan products you use, of course the market has wiped out a lot of the more dangerous loans but some lenders are still making them. Do what is right for you and your family for the long term, it's not about being able to buy a house, it's about creating a home.