Average interest on a 30-year fixed mortgage fell to an all-time low of 4.69 percent this week, down from 4.75 percent a week ago, reports Freddie Mac. Although rates have held below 5 percent since early May, Michael Fratantoni of the Mortgage Bankers Association notes that demand for purchase loans has fallen in six of the past seven weeks and now is at a 13-year low. Consumers have grown used to low rates, he explains, adding that they balk at buying because they are more concerned about stagnant wages and high unemployment.

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The clouds may be starting to lift, ever so slightly, for the beleaguered housing market. The latest evidence came recently when new data showed that fewer homeowners are falling behind on their home loans. The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 9.47% of all loans as of the end of the fourth quarter of 2009, according to the Mortgage Bankers Association. That’s down from 9.64% in the third quarter. It’s extremely rare for the delinquency rate to decline at the end of the year when homeowners are grappling with the cost of heating bills and Christmas presents. The data still pointed to a troubled housing market that is likely to worsen before it improves. The delinquency rate was up from 7.88% a year ago. And though California is faring better than some other hard-hit states, the state delinquency rate is 12.49%.  In a sign that delinquencies may be leveling off, loans past due by 30 days and 60 days declined compared with the third quarter of 2009 and the fourth quarter of 2008. The number of loans going into foreclosure, though up from a year earlier, declined compared with the third quarter as efforts to modify mortgages took hold. But the portfolio of loans more than 90 days past due—containing the mortgages being evaluated for modifications—continued its rise to record levels. That indicates that there is still much short-term pain for the housing markets to endure as many of these fall into foreclosure.  4.99% of all prime fixed-rate loans, the kind made to the best-qualified borrowers, were categorized as seriously delinquent (that is, in foreclosure or more than 90 days past due), up from 2.25% a year earlier. For prime adjustable-rate loans, the category containing tricky pay-option mortgages, 18.13% were seriously delinquent, compared with 10.45% a year earlier. And 42.7% of subprime adjustable loans were seriously delinquent, up from 33.78% in the fourth quarter of 2008.

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