A 30-year fixed mortgage can now be had at a rate of 4.85%, the lowest recorded rate in a Freddie Mac survey dating to 1971.

Bankrate.com reports that the nation’s average rate at 5.19% is the lowest since 1956.

This drop was in direct response to the Federal Reserve’s announcement that it would buy $300 billion in U.S. Treasury bonds over the next six months.

Frank Nothaft, a Freddie Mac chief economist, said in a news release, “The Federal Reserve's announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed.”

We’ve already seen that new home sales have climbed 4.7% in February. Existing home sales also climbed nearly 5% in February.

Thus far in March, applications for mortgages have risen for three consecutive weeks. And refinancing applications jumped 41.5% last week.

Bloomberg interviewed Susan Wachter, a professor of real estate finance at the University of Pennsylvania’s Wharton School, on March 24. She said that housing prices “aren’t that far from where we need to be if the economy stabilizes and starts growing again.”

But not all is rosy right now. In fact, commercial real estate is facing a severe delinquency crisis.

The Wall Street Journal reports, “The delinquency rate on about $700 billion in securitized loans backed by office buildings, hotels, stores and other investment property has more than doubled since September to 1.8% this month.”

That’s just shy of the highest rate recorded this decade.

“Some experts say,” writes Lingling Wei from WSJ, “it now looks as if the current commercial real-estate slump will rival or even exceed the one in the early 1990s, when bad commercial-property debt played a big role in dragging the economy into a recession. Then, close to 1,000 U.S. banks and savings institutions failed. Lenders took about $48.5 billion in charges on commercial real-estate debt between 1990 and 1995, representing 7.9% of such debt outstanding.”

So with really low interest rates because of extreme Federal Reserve moves, and the potential for a massive commercial property crisis, the market and the U.S. dollar could be staring at another stiff drop.

Justice Litle, editor of Macro Trader, says, “The Fed’s bold move caught us by surprise – as it caught most everyone by surprise – but fortunately we were already short the dollar and long hard assets (including oil and gold) via various instruments when the big announcement went down.”

And investors can still position themselves in these inflationary hedges. Justice says, “We are still making hay from those positions, and [recently] booked 92% half profits on our bearish dollar play.”

Other Related Topics: Real Estate , Recession , Sara Nunnally , Stimulus Plan , Taipan Insider

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