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Prospective Homebuyers Still Holding Off

People are still waiting for prices to come down more.

Mortgage rates have dropped or remained flat for several weeks, but would-be homebuyers are still holding off for better deals, according to HSH Associates.

HSH's Fixed Rate Mortgage Indicator, which includes conforming, jumbo and "expanded conforming" loans, slid seven basis points last week to land at 6.5%. Hybrid adjustable-rate mortgages also fell, shedding five basis points to 6.11%. A basis point is 1/100th of a percentage point.

Still, the benefits of the

Federal Reserve's

rate-cutting campaign are not being fully passed on to borrowers, indicating that interest rates could drop further. For now, HSH says, lenders are using the advantage to make more profitable loans to counteract the money-losing assets they already have on their books.

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It has become much tougher for potential homebuyers to get mortgages because of stricter lending standards. For those who have good credit, "money is certainly available," says HSH's weekly report, which is based on a survey of mortgage lenders. But "with home prices still sliding, many would-be buyers are likely waiting for further declines before buying a home."

On Tuesday, the national average rate for a 30-year fixed mortgage dropped to 6.05% from 6.34% a week earlier, according to

. The rate on a 15-year fixed mortgage also dropped to 5.74% from 5.83%, though three- and five-year adjustable-rate mortgage rates increased.

Looking ahead, HSH says the "stumbling economy continues to throw off mixed signals about what may come next." The firm doesn't expect much movement in rates this week.