Mortgage rates dropped steadily through 2014 and have continued falling in the new year as low inflation, global crises and economic turmoil in Europe drive demand for US Treasury bills higher, pushing down interest rates. The average rate on 30-year fixed mortgages fell to 3.66% as 30-year Treasuries hit 2.367%, the lowest rate ever. Combined with the federal government’s news last week that it would cut the insurance premium charged on Federal Housing Administration (FHA) loans, falling mortgage rates are expected to give a boost to first-time homebuyers in 2015. Homeowners seeking to refinance are already benefiting from falling rates.
 
Hoping to assist homebuyers looking for the best mortgage rate, the Consumer Financial Protection Bureau (CFPB) introduced an online tool to help borrowers compare rates from different lenders and prepare to purchase a home. The CFPB also released the results of its National Survey of Mortgage Borrowers, a user-friendly report that summarizes current housing market conditions and provides data about borrowers’ experiences with the lending process.
 
Also out this week: A report on tax inequality by the Institute on Taxation and Economic Policy titled “Who Pays? A Distributional Analysis of the Tax Systems in 50 States.” The Institute found state and local taxes fall hardest on the poor, consuming some 10% of their income compared to the richest one percent of taxpayers, who pay 5.4% of their income in state and local taxes.
 
Last, Corelogic reported that October cash purchases of homes continued their 22-month drop, falling to 35% of sales from a peak of 46.4% in January 2011. In California, cash purchases were 25% of all sales. Nationwide, the share of all cash sales was highest for lender owned (REO) property, at 58.7%. Cash sales have steadily declined since January 2013, with CoreLogic predicting they will return to pre-crisis levels of around 25% by 2017.