The 30-year fixed rate mortgage was quoted at 4.0% as of November 4, the lowest since 1971 (see Chart 3). Home prices are attractive as they have declined 32% from the peak in 2006.

However, the latest Senior Loan Officer Survey shows that standards for mortgage loans have not changed significantly (see Chart 4). In other words, the underwriting standards for loans are tight. Therefore, low mortgage rates and suitable home prices are inadequate to lift home sales.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

Comments

Mary Harries
12 Nov 11, 18:35

It's good news

For me it's good news for people want to have their own home and for the economy knowing the underwriting standards for loans are tight. Therefore, low mortgage rates and suitable home prices are inadequate to lift home sales.

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