Even though the Fed has been lowering interest rates lately, the housing sector has not followed suit as energetically as some rate watchers would have hoped. But let’s not lose sight of the big picture – interest rates are still at some of their lowest points in history.

For fixed-rate loans, the interest on a 30-year Conventional is around 6.25% with no points or origination fees, or 5.875 with 1 point. For a 15 year it’s right around 6.125%. FHA 30-year rates are 6.375%.

It’s interesting that Conventional loans have a lower rate than FHA loans right now, but FHA loans are still popular for houses in good condition, because the buyer needs less money down and has more flexibility in their credit score, than with a Conventional loan. (Call me if you have questions about this. Lisa at 504-957-2422).

So why have interest rates for home loans stayed the same or sometimes risen even while the Federal interest rate has decreased? Joe Uzee, Vice President of Gulf Coast Bank & Trust says it’s because of fear. “There exist investors (who). . . are now fearful of investing in these instruments because of the current crisis in these mortgage backed securities,” he writes in an update on the week’s rates.

Because the housing industry has born the brunt of responsibility for our national financial crisis, investors are reluctant to put a lot of their money into home loans. Therefore there’s that much less money to loan out, and with decreased supply, comes increased costs of getting a loan, like higher interest rates.

But just because interest rates aren’t at their lowest point ever, that doesn’t’ mean they’re not still very low historically. If you get a fixed-rate loan with an interest rate in the low sixes, you’re not likely to regret it!

Chances are the housing industry, which led the financial fall, will also lead the recovery, being one of the first sectors to recover. And cities like New Orleans, that weren’t as affected by defaults and foreclosures, will be the first to rebound.