Mortgage interest rates dropped again this week, setting new record-lows across the board. Analysts say we have bond investors to thank for the continuing declines.
[IMAGE] Investors are expecting the Federal Reserve to begin pumping more money into the economy to reinvigorate the now lukewarm recovery.
In anticipation of more Ã¢â‚¬Ëœquantitative easing' by the U.S. central bank, there's been a rush to buy up mass amounts of both government- and mortgage-backed debt, which in turn has served to drive mortgage rates lower Ã¢â‚¬" now at their lowest point in more than a half-century.
""Freddie Mac"":http://www.freddiemac.com reported Thursday that the 30-year fixed-rate mortgage dropped yet again to break the previous all-time low in the GSE's survey. The 15-year fixed-rate did the same, and the 5-year adjustable-rate mortgage also set an all-time survey low.
Freddie's report puts the 30-year fixed-rate mortgage (FRM) at an average of 4.27 percent (0.8 point) for the[COLUMN_BREAK]
week ending October 7, down from last week when it averaged 4.32 percent.
The 15-year FRM averaged 3.72 percent (0.7 point), dropping from 3.75 percent last week. The 5-year adjustable-rate mortgage (ARM) came in at 3.47 percent this week (0.6 point). It was 3.52 percent last week.
Frank Nothaft, VP and chief economist for Freddie Mac, explained, Ã¢â‚¬Å“The 12-month growth rate in the core price index for personal consumption, which the Federal Reserve closely tracks, has been drifting lower over the past six months ending in August and suggests inflation is running at a tepid pace at best. This allowed mortgage rates to ease.Ã¢â‚¬Â
Nothaft also noted that housing affordability increased for the second month in a row in August to tie AprilÃ¢â‚¬â„¢s level, citing figures released by the ""National Association of Realtors"":http://www.realtor.org.
A separate weekly ""study by Bankrate"":http://www.bankrate.com/finance/mortgages/record-low-rates-slide-further.aspx also put the full spectrum of mortgage interest rates at record-lows. BankrateÃ¢â‚¬â„¢s survey is based on data gathered from the top 10 banks and thrifts in the top 10 U.S. markets.
The tracking company reported that the average conforming 30-year fixed mortgage rate dropped to 4.45 percent this week (0.32 point). ThatÃ¢â‚¬â„¢s down from 4.50 percent reported in last weekÃ¢â‚¬â„¢s survey.
The average 15-year fixed mortgage dropped to 3.87 percent (0.30 point), in BankrateÃ¢â‚¬â„¢s study, down from 3.94 percent last week. The 5-year ARM came in at 3.64 percent, and the larger jumbo 30-year fixed rate fell to 5.14 percent.