Lower rates could encourage home buying

As personal finances dwindle, a recent announcement from Freddie Mac may make budgeting to buy a home a little easier on consumers.

According to a recent report from the mortgage lender, a number of mortgage rates saw a drop in percentage. For example, the average rate on a 30-year fixed mortgage fell from 5.42 percent to 5.32 percent with an average 0.7 point.

At this time last year the average rate on a 30-year fixed mortgage was at 6.35 percent.

Frank Nothaft, Freddie Mac vice president and chief economist, said recently that the drop in rates helps support the housing market. He also said declines in house prices may be “moderating” as well.

Citing a S&P/Case-Shiller 20-city composite index, Nothaft said home values dropped at a monthly rate of 0.6 percent in April, the smallest decline since June of 2008.

The federal government also took steps with regard to home refinancing. The Obama Administration announced recently a modification of its Making Home Affordable program.

Now homeowners whose first mortgage is worth no more than 125 percent of the property’s value can take part in the program. Before the change, the homeowner’s first mortgage could not be worth more than 105 percent of the property’s value.