Mortgage Loans: Low Rates Producing Home Sales Growth

October 4, 2010 Updated: October 1, 2015

Mortgage loans with record-low rates have led to an increase in pending home sales for the second straight month. (Justin Sullivan/Getty Images)
Mortgage loans with record-low rates have led to an increase in pending home sales for the second straight month. (Justin Sullivan/Getty Images)
Mortgage loans with record-low rates have led to an increase in pending home sales for the second straight month, according to a report released on Monday by the National Association of Realtors (NAR).

The Pending Home Sales Index, a gauge of home sales that attempts to predict future market activity, rose 4.3 percent to 82.3 percent in August, up from 78.9 percent in July. August’s index, which includes data from only contracts and not closings, is a year-on-year decrease from 103.0 in August 2009.

Freddie Mac said last Thursday that 30-year rates were averaging 4.32 percent, which tied a record low, and 15-year rates were at 3.75 percent, which set a record low.

“Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market,” NAR chief economist Lawrence Yun said in a statement.

While mortgage rates are low for the time being, Yun warned that the rates may not remain low for long due to inflation.

“Recent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices, are raising concerns about future inflation and future mortgage interest rates,” he said. “Higher inflation would mean higher mortgage interest rates.”