Market Concerns Push Mortgage Rates to New Lows
After Standard & Poor’s recent first-ever downgrades of the U.S.’ credit rating, as well as Freddie Mac and Fannie Mae’s and other banks, everyone was watching mortgage rates closely this week to see if the downgrades would have an immediate impact and send rates higher. But all of the economic concerns actually had the opposite effect, pushing mortgage rates to new lows, according to Freddie Mac’s weekly mortgage market survey.
The 30-year fixed-rate mortgage, a popular choice among home buyers, reached a new low for the year while the 15-year fixed-rate mortgage, 5-year adjustable-rate mortgage, and 1-year ARM all averaged new all-time record lows. Also possibly serving as a boost to home buyers and those looking to refinance, the Federal Reserve announced this week that the weak economy has prompted them to vow to keep the federal funds rate exceptionally low at least through mid-2013.
“Lower mortgage rates will help to maintain the high degree of home buyer affordability in the market,” says Frank Nothaft, chief economist at Freddie Mac. Home affordability has been at its highest level in the past three quarters since 1970, according to the National Association of REALTORS®’ affordability index.
Here’s a closer look at how rates fared for the week:
•30-year fixed-rate mortgage: averaged 4.32 percent, down from last week’s 4.39 percent, and marking this week a new low for this year. A year ago at this time, the 30-year rate averaged 4.44 percent.
•15-year fixed-rate mortgage: averaged 3.50 percent, moving down from last week’s 3.54 percent, and reaching a new all-time low for 15-year rates. Last year at this time, the 15-year mortgage averaged 3.92 percent.
•5-year ARM: averaged 3.13 percent this week, inching down from last week’s 3.18 percent. Last year at this time, the 5-year ARM averaged 3.56 percent.
•1-year ARM: averaged 2.89 percent, dropping from last week’s 3.02 percent. A year ago at this time, the 1-year ARM averaged 3.53 percent.
Source: REALTOR Magazine Daily News