How low will they go? Mortgage rates fall to new 2014 lows

Global woes could have an upside on the home front.

Mortgage rates are now at the lowest level of the year, with the average rate for a conforming 30-year, fixed-rate mortgage slipping to 4.15 percent, according to a national survey by HSH.com released Wednesday.

Though it was a modest decline, the rate on the 30-year is now nearly a half percentage point lower than it was at beginning of the year.

"Every little dip does help," said Keith Gumbinger, HSH.com's vice president. "Lower mortgage rates can provide a bit of an offset to rising home prices."

Despite solid economic growth in the U.S., mounting concerns about geopolitical unrest have caused investors to seek the safety and stability of U.S. Treasuries, which influence mortgage rates.

"Troubles around the world continue to be a mortgage shopper's best friend," Gumbinger said.

After falling to record lows in late 2012, mortgage rates have been relatively stable. By mid-2013, rates flirted with 5 percent, but they have been virtually flat since late spring when they started slipping.

"Home sales historically follow payroll growth, not rates," said Alex Stenback, a mortgage banker with Alerus Mortgage in Minnetonka. "And these lows are not low enough to set off another wave of refinancing."

Still, experts say that when rates are declining home buyers tend to be more confident than when they are rising because of the certainty that a low rate will be waiting for them when they're ready to buy.

This week, mortgage applications increased 0.2 percent from the previous week, according to the Mortgage Bankers Association. Applications for refinancings increased slightly while purchase apps declined. Refinancings represented 57 percent of all applications, the highest level since March.

The declines come at a crucial time for the housing recovery, which has struggled to regain the momentum it possessed last year when investors armed with cash snapped up bank-owned listings as fast as they hit the market. Today, with mortgage delinquencies falling, those deeply-discounted listings are more difficult to find, and traditional buyers have replaced investors.

During August, there were 4,958 home sales in the Twin Cities metro area, a 13 percent decline from last year, according to the Minneapolis Area Association of Realtors. Foreclosure sales during that time fell nearly 60 percent.