Low mortgage rates and falling home prices have yet to kick-start homebuyer demand as the spring buying season approaches, as many would-be homebuyers who are willing to risk the prospect of further price declines are unable to qualify for loans.

Freddie Mac’s weekly Primary Mortgage Market Survey showed rates at or near record lows for the week ending March 8, with rates on 30-year fixed-rate loans averaging 3.88 percent with an average of 0.8 point.

That’s down from 3.9 percent last week and 4.88 percent a year ago, and just a hair above the all-time low in records dating to 1971 of 3.87 percent seen during the first three weeks of February.

Rates on 15-year fixed-rate loans — a popular choice for refinancing — averaged 3.13 percent with an average 0.8 point, down from 3.17 percent last week and 4.15 percent a week ago. That’s a new low in Freddie Mac records dating to 1991.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.81 percent with an average 0.7 point, down from 2.83 percent last week and 3.73 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 2.8 percent the week of Feb. 23, 2012.

Rates on 1-year Treasury-indexed ARM averaged 2.73 percent with an average 0.6 point, up slightly from a low in records dating to 1984 of 2.72 percent seen last week, and down from 3.21 percent a year ago.

Freddie Mac Chief Economist Frank Nothaft noted that a CoreLogic national home price index fell for the sixth month in a row in January to the lowest level in nine years, and the typical family had more than double the income needed to purchase a median-priced home, according to the National Association of Realtors’ Housing Affordability Index.

But a weekly survey by the Mortgage Bankers Association showed applications for purchase mortgages were down 7.8 percent during the week ending March 2 compared to a year ago. Requests for refinancings accounted for 77 percent of all mortgage applications

In a Jan. 4 white paper, the Federal Reserve described "extraordinary problems plaguing the housing market," including an excess supply of vacant homes, tight mortgage credit, and the costs of an "unwieldy and inefficient" foreclosure process.

"The significant tightening in household access to mortgage credit likely reflects not only a correction of the unsound underwriting practices that emerged over the past decade, but also a more substantial shift in lenders’ and (Fannie Mae and Freddie Mac’s) willingness to bear risk," the Fed warned.

Inman News columnist Jack Guttentag says that the Fed "shares the consensus view of informed observers that housing recovery has been hampered by excessively restrictive lending standards set by Fannie Mae and Freddie Mac."

But Guttentag said mortgage lenders have been even more restrictive than Fannie and Freddie, and wonders why lenders don’t compensate for low credit scores with higher down payment requirements, higher payment reserves, or lower maximum debt ratios.

"There no longer seems to be any underwriter discretion in connection with conforming loans, but the reasons are not clear," Guttentag wrote in a recent column. "My surmise is that it is connected to the complex contracts that govern the relationships between the agencies and the lenders that sell to them."

During the housing downturn, Fannie and Freddie — which purchase mortgages and guarantee payments on mortgage backed securities, but don’t make them — have forced lenders to repurchase billions in loans made during the boom. When borrowers defaulted, in many cases Fannie and Freddie found alleged misrepresentations or fraud

A key provision of the Obama administration’s revamp of the Home Affordable Refinancing Program (HARP) is for Fannie Mae and Freddie Mac to release lenders who sign off on a refinanced loan from some legal liabilities associated with the original mortgage.

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