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The causes of the housing market’s well-documented ills, whatever those causes may be, do not appear to include interest rates.

The average rate on a 30-year fixed mortgage has declined steadily since July and now rests near levels not seen since 2005. The average 1-year adjustable-rate mortgage (ARM) rate has likewise fallen, but still rests above its early 2006 levels.

The 1-year Treasury rate, which serves as a common benchmark by which adjustable mortgage payments are recalculated, has also meandered down since July. However, the current 1-year Treasury rate of 4.9 percent compares to an average rate of 3.6 percent in 2005 and 1.9 percent in 2004. As a result, ARM borrowers of recent years can expect their payments to increase substantially when reset time comes.

For new buyers, though, the mortgage rate picture has improved quite a bit in the past half year. The housing market does not seem to be taking comfort – but perhaps real estate would be faring even worse had not declining rates provided a tailwind.

– RICH TOSCANO

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