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Consumers less confident in ability to buy homes

11.30.2012

The exact mortgage rate a consumer receives relies heavily on their personal financial standing.

Although mortgage rates hovering near all-time lows makes the prospect of purchasing a home much more attainable for consumers, many people still think purchasing property is out of their financial grasp.

Nearly 88 percent of Americans still believe owning a home is important, according to a survey from Country Financial. However, based on current economic conditions, only 45 percent feel buying a home is realistic for middle-income households.

"Homeownership is important for Americans, but the market's slow recovery might be causing them to doubt its value," said Joe Buhrmann, manager of financial security support at Country Financial. "Although the housing and job market may be recovering, there's still a sense of uncertainty."

Meanwhile, the survey indicated that younger consumers are more optimistic about their chances of qualifying for a mortgage and their ability to buy a home. Although, a shrinking share of this age group actually believe that owning a home is a good investment and could refrain from making the transition to homeownership based on this sentiment in the future.

Mortgage rates providing options
Although a greater number of consumers may not have confidence in their ability to purchase homes, fixed mortgage rates hovering near all-time lows could provide them with options of which they were not initially aware.

During the week ending November 29, the average rate for a 30-year FRM edged higher to 3.32 percent, up from 3.31 percent, according to a report from Freddie Mac. Meanwhile, 15-year fixed-rate mortgages averaged 2.64 percent, up slightly from 2.63 percent a week earlier. Despite these developments, new home sales have been relatively mute in recent weeks.

"Although low mortgage rates failed to boost new home sales in October, year-to-date sales are up 20 percent compared with 2011 volumes, and there are growing signs of a turnaround in house prices," said Freddie Mac vice president and chief economist Frank Nothaft.

Additionally, five- and one-year Treasury-indexed hybrid adjustable-rate mortgages averaged 2.72 and 2.56 percent, respectively, the report said.

The exact mortgage rates borrowers receive is based heavily on their individual financial standing, so they should ensure their finances are in the best possible shape before shopping around for a home loan.

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