U.S. interest rates are at rock-bottom levels and they’re poised to stay there for a while, but that’s not helping most Americans with mortgages, The Los Angeles Times reports. And those high-cost loans remain a big drag on the economy, experts say. Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher, and about 33% of them had rates above 6%, according to detailed mortgage data provided to the newspaper by Santa Ana research firm CoreLogic. Meanwhile, the average 30-year fixed-rate mortgage has been below 4% every week but one this year, and the average 15-year fixed-rate mortgage, popular among buyers looking to refinance, has been below 3% since the last week in May, according to Freddie Mac. Several factors may be keeping homeowners from securing lower mortgage rates, economists say, including battered credit, insufficient income, stricter lending standards and the costs of refinancing. But a major aftershock from the housing crisis itself also remains a big stumbling block: the significant chunk of homeowners who are underwater and unable to get new loans. For underwater borrowers—those who owe more than their homes would bring if sold—the CoreLogic data show that 84% had loans with interest rates above 5%. Half of underwater borrowers had interest rates above 6%. Read the full story here for more details, including ways economists and policymakers see a big opportunity to stimulate the economy by getting borrowers into lower-cost loans.
Today’s poll question: What percentage of interest are you paying on your mortgage?
