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Mortgage Rates Reach All-Time Lows

September 15, 2011 – Already at an all-time low, fixed-rate mortgage numbers continue to plummet, having declined by almost 50 percent over the past 10 years.

Freddie Mac announced today the results of its weekly Primary Mortgage Market Survey, which show that fixed mortgage rates remain at their lowest levels in 60 years. The rate for a 30-year fixed mortgage sunk to 4.09 percent, while a 15-year fixed rate now sits at 3.30 percent – both numbers signifying record lows since Freddie Mac began tracking the rates in 1971.

These rates are in their second consecutive week of such declines. Experts cite European financial woes as the source.

“Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week,” Vice President and Chief Economist for Freddie Mac Frank Nothaft said.

The 30-year rate has stayed below five percent for the entire past year, except for two weeks. Five years ago, the rate was 6.5 percent, and 10 years ago it was eight percent. The lowest rates in U.S. history were in 1950-51, when the long-term fixed-rate mortgages hit 4.08 percent – notably only .01 percent lower than this week’s average rate.

In spite of historically low rates, the housing industry continues to suffer, with new home sales at their worst in the last half-century and re-sales hitting 14-year lows as well. Freddie Mac attributes this to the fact that rates often come with additional fees that make them higher than they seem. After fees, the 30-year rates are actually closer to 4.25 percent.

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Fixed Mortgage Rates Hit Historic Lows

Freddie Mac reported that fixed-rate mortgage loans hit record lows for the week ending on May 3, 2012. With the 30-year rate averaging at 3.84 percent, and the 15-year rate averaging at 3.07, these are the lowest reported averages for fixed-rate mortgages in history.

“Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week,” said Frank Nothaft, vice president and chief economist at Freddie Mac, in a press release.

Low interest mortgage loans have been a key selling point for real estate agents and brokers looking to scrounge up business in our depressed economy. To put into perspective just how low these historic rates are, last year at this same time, the average 30-year rate was 4.71 percent while the average 15-year rate was 3.89 percent.

In addition to the fixed-mortgage rates hitting record lows, the 1-year adjustable rate mortgage (ARM) also averaged at a new historic low. Boasting a strong 2.70 percent, investors interested in ARMs are facing an extremely rare and profitable opportunity as borrowing money at less than 3 percent is nearly unheard of.

Last year, the 1-year ARM averaged at 3.14 percent.

The only rate that Freddie Mac reported didn’t break a historic record was the 5-year ARM. Last week the 5-year ARM sat at 2.85 percent, and this week it remains unchanged. Last year, however, it was over half-a-percent higher, averaging at 3.45 percent.

Freddie Mac acts under the direction of the Federal Housing Finance Agency (FHFA) and currently secures mortgage loans across the nation. While operating in the secondary mortgage market, Freddie Mac also participates in cost-reducing programs as it continues to support the nation’s recovery.

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Mortgage Rates Keep Finding New Record Lows

Since the beginning of May, 15- and 30-year home loan interest rates plummeted to record-breaking lows. This trend of falling rates coupled with the weak housing market, has continued into July.

The results of the Primary Mortgage Market Survey from Freddie Mac show that the average fixed mortgage rate is continuing to reach new record lows due to a decline in consumer spending and a shrinking of the manufacturing industry.

According to the home loan interest rates survey, in 10 of the last 11 weeks, the average 30-year fixed-rate mortgage matched or broke historic records.

This week’s rate for 30-year fixed-rate mortgages (FRM) is 3.62 but back in the final week of June it was 3.66 percent.

This week’s rate for 15-year FRMs is 2.89 percent but back in the final week of June it was 2.94 percent.

Freddie Mac leadership noticed the continuing home loan interest rates trend and also the accompanying factors.

“Recent economic data releases of less consumer spending and a contraction in the manufacturing industry drove long-term Treasury bond yields lower over the week and allowed fixed mortgage rates to hit new all-time record lows,” said Frank Nothaft, vice president and chief economist at Freddie Mac.

Nothaft noted that consumer spending has continued to lessen since April. He also commented that manufacturing shrank in June for the first time since July 2009.

The shrinking of manufacturing in June is a worrisome sign that the job market may continue to flat-line, which directly influences the health of the housing market.

As the mortgage industry is painfully aware, people without jobs often shift their financial priorities from their mortgages to their other loans. While lenders may find comfort in the fact that low interest rates incentivize refinancing opportunities, rates may need to drop lower to stop the wave of strategic defaults that a poor job market will bring.

Likewise, low rates also mean that prospective borrowers, however few there may be, will be incentivized to get a mortgage and take advantage of the present low rates. While an increase in mortgage loan borrowing would be great for the industry, this continued trend of record-breaking rates comes as a result of poor economic triggers.

Falling home loan interest rates hints at a shrinking supply of prospective home buyers and a growing supply of home properties. This negative supply and demand curve we’re seeing feeds into the dismal jobs market since contractors, builders, construction suppliers, and building suppliers suffer from decreased work.

While the few prospective homeowners or investors who are house shopping may enjoy these nose-diving home loan interest rates, it remains to be seen if the economy will continue to worsen amid the looming threat of a second, or “double-dip,” recession.

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Home Loan Interest Rates Hover by Historic Lows

Freddie Mac’s weekly interest rate report revealed that home loan interest rates for the four types of primary mortgages either declined or remained steady when compared to last week’s report. All of the reported interest rates continue to hover around their historic low records.

The 30-year fixed-rate mortgage averaged at 3.55 percent this week, while the 15-year fixed-rate averaged at 2.86 percent.

That’s a decline of 0.04 percent for the 30-year home loan, and a 0 percent change in the 15-year.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged at 2.75 percent this week, while the 1-year ARM averaged at 2.61 percent.

The 5-year is down by 0.03 percent from last week and the 1-year is down by 0.01 percent.

“Mortgage rates were little changed over the holiday week amid mixed economic data releases,” said Frank Nothaft, Freddie Mac’s vice president and chief economist, in a release. “Although consumer spending rose 0.4 percent in July, representing the largest gain in five months, the core price index was unchanged, suggesting little threat of inflation.”

Nothaft also cited a study by the University of Michigan which found that consumer confidence picked up slightly in August, which may have contributed to the halt in constant record-breaking low interest rates we saw for nearly two straight months.

Through June and July, home loan interest rates broke their historic low records over ten times. During the week of July 26th, the 30-year fixed interest rate bottomed out at an astonishing 3.49 percent.

Compared to one year ago, the rates of today are down by over a half a percent, as Freddie Mac reported the 30-year rate at 4.09 percent in the beginning of Sept. 2011.

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Mortgage Interest Rates Drop to Record Lows

Fixed mortgage interest rates dipped to new record lows according to Freddie Mac survey results released today.

The 30-year fixed-rate mortgage (FRM) averaged 3.34 percent with an average 0.7 point for the week ending on Nov. 15, 2012. The average was down from last week’s of 3.40 percent. At this time last year, the fixed mortgage interest rates averaged 4.00 percent.

The 15-year fixed-rate mortgage averaged 2.65 percent with an average of 0.7 point, down from last week’s average of 2.69 percent. At this time last year, the 15-year FRM averaged 3.31 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.74 percent with an average of 0.6 point this week, an increase from last week’s 2.73 percent average. A year ago, the ARM averaged 2.97 percent.

The 1-year Treasury-indexed ARM averaged 2.55 percent with an average of 0.3 point, a decline from last week when it averaged 2.59 percent. A year ago, the 1-year adjustable-rate mortgage averaged 2.98 percent.

Frank Nothaft, vice president and chief economist of Freddie Mac, said the record lows occurred even in the midst of higher consumer confidence and low wholesale prices.

“Consumer sentiment rose in November to the highest reading since July 2007 according to the University of Michigan. Meanwhile the core producer price index fell 0.2 percent in October,” Nothaft said in a press release.

The record low for the 30-year fixed mortgage interest rate was previously set the week of Oct. 4 when it averaged 3.36 percent. The 15-year fixed record low was set the week of Oct. 18 when it averaged 2.66 percent.

Freddie Mac, a provider of liquidity and stability for the United States’ residential mortgage markets, conducts surveys each week to assess four types of mortgage interest rates. Freddie Mac’s Primary Mortgage Market Survey (PMMS) does not include closing costs, which are still required for borrowers.

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Home Loan Rates Continue to Drop Towards Record Lows

Home loan interest rates hovered around record lows this week according to interest rate reports provided by loans.org.

For the week ending April 25, 2013, the 30-year fixed-rate mortgage (FRM) averaged 3.32 percent. This rate is down from last week’s average of 3.33 percent.

The home loan interest rates are averages compiled throughout the United States. Each state varies, rising either above or below the national average. For example, Alaska’s 30-year FRM finished above average at 3.35 percent; meanwhile Idaho was below the national average at 3.31 percent. 

The 15-year fixed-rate mortgage averaged 2.53 percent, down from last week when it averaged 2.54 percent.

The 5/1 adjustable-rate mortgage (ARM) averaged 2.26 percent, the same as last week.

Home loan interest rates have slowly increased above record lows for the past few months, but recently the rates have experienced a steady decline back down towards the lows seen in 2012. The low rates continue to assist the recovering housing industry.

According to the National Association of Realtors, existing home sales averaged 4.94 million (annualized pace) over the first three months of 2013. This pace is the strongest since Q4 2009.

New home sales also experienced a significant boost recently.  Sales during Q1 2013 reached 424,000, the strongest since Q3 2008.

Both existing and new home sales, fueled by low home loan interest rates, assist the housing industry and help stabilize housing prices. The Federal Housing Finance Agency reported that the U.S. house price index has consecutively grown. February marked the thirteenth month in a row that the index has increased. In that time, it rose by 7.1 percent.

Despite positive rates for borrowing and strong sales reports, the U.S. index is still 13.6 percent below the housing peak reached in April 2007.  

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Mortgage Interest Rates Hover Above 2012 Record Lows

Mortgage loan interest rates hover above record lows this week according to interest rate reports provided by loans.org.

For the week ending May 2, 2013, the 30-year fixed-rate mortgage (FRM) averaged 3.24 percent, a significant drop from last week’s rates of 3.33 percent.

If an average borrower took out a $250,000 home loan at today’s rates instead of a year ago, that borrower would save $30,222 over the lifetime of his or her loan. At today’s mortgage interest rate of 3.24 percent, his or her monthly payment on the $250,000 home loan would be $1,086.64. After 30 years, he or she would pay a total of $391,190.40.

According to Freddie Mac, at this time last year, the 30-year FRM averaged 3.84 percent. Using this rate, if borrowers took an equivalent loan out a year ago, they would pay $1,170.59 monthly, for a total cost of $421,412.40 after 30 years. The current mortgage loan interest rate would save borrowers a significant amount of money.

In addition, loans.org reports that the 15-year fixed-rate mortgage averaged 2.48 percent. The rate is down from last week when it averaged 2.54 percent.

The 5/1 adjustable-rate mortgage (ARM) averaged 2.26 percent. This rate has remained the same for the past three weeks.

Mortgage loan interest rates reduced ever further this week after Gross Domestic Product (GDP) reports were released. The Bureau of Economic Analysis released an advance estimate of real GDP which shows growth of 2.5 percent for Q1 2013. Despite an increase, the rate fell short of economic forecasts.

According to Freddie Mac, another contributor to the weekly low rates is residential fixed investment. Over the past eight quarters, the fixed investment has been strong. From January to March 2013, it experienced more than 0.3 percent growth.

Sol Nasisi, president of BestCashCow, told loans.org that mortgage rates increased in previous months due to expectations of economic growth.

According to the Federal Reserve’s Federal Open Market Committee (FOMC) meeting data released yesterday, inflation will remain below the target rate of two percent. Despite hearsay about the Fed decreasing its Treasury purchases, the committee stated that it will continue buying $85 billion per month.

Unemployment is still above the 6.5 percent target rate needed to raise interest rates.

“Rates are low because the economy is still stuck in low gear,” Nasisi said. 

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Mortgage Interest Rates Steered Away From Record Lows

Mortgage interest rates increased and moved away from record lows this week according to rate reports provided by loans.org.

Mortgage interest rates have finally turned around despite heading in a general downward direction for over a month.

For the week ending May 9, 2013, the 30-year fixed-rate mortgage (FRM) averaged 3.38 percent, an increase from last week’s rate of 3.33 percent.

The 15-year FRM averaged 2.56 percent. This rate is slightly up from last week when it averaged 2.54 percent.

Finally, the 5/1 adjustable-rate mortgage (ARM) interest rate averaged 2.3 percent, an increase from 2.26 percent set last week.

Deborah Bernat, senior associate at Hammond Residential Real Estate, said it is a good time to buy with acquisition financing and because of the low mortgage rates.

“I encourage my clients to think about their long term plans,” Bernat said. “It makes sense for many of my clients to purchase properties that will meet their needs for the next twenty years versus the next ten years.”

The housing market was strengthened by several outside factors, but the main contribution was the strong employment report in April.

According to the Bureau of Labor Statistics, around 165,000 new net jobs were gained by the economy during April. The addition was more than the market consensus forecast and the largest monthly increase during 2013.

Due to revisions, 114,000 more jobs were added to reports for February and March. New jobs and revisions forced the unemployment rate to fall to 7.5 percent in April, making it the lowest rate since December 2008.

Keith Newcomb, portfolio manager for Full Life Financial, said market participants react to trends in employment, inflation expectations and rate expectations, in addition to expected returns that are relative to other investments in the fixed income space.

Newcomb said that typically when stocks are down, bonds are up and interest rates are lower.

“Mortgages are spread products, so they follow,” he said.

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