Mortgage Rates Dip Following Disappointing Employment Report

The journey downward has begun again. After remaining relatively steady last week, mortgage rates hit new lows for the week ending June 10, 2010, ""Freddie Mac"":http://www.freddiemac.com/ and ""Bankrate"":http://www.bankrate.com/ reported Thursday.

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""Following a relatively weak employment report, bond yields fell this week and mortgage rates followed,"" said Frank Nothaft, Freddie Mac VP and chief economist. ""Interest rates on 30-year fixed mortgages hover near the record low set on December 3, 2009 in our survey. Meanwhile, rates on 15-year fixed mortgages set another record low for the fourth week in a row.""

According to Freddie Mac's ""Primary Mortgage Market Survey"":http://www.freddiemac.com/pmms/release.html?week=23&year=2010, 30-year fixed-rate mortgages averaged 4.72 percent with an average 0.7 point this week. Rates fell from last week's average of 4.79 percent and were significantly lower than last year at this time when 30-year fixed-rate mortgages averaged 5.59 percent.

Freddie Mac also reported a decline in 15-year fixed-rate mortgages, setting another record low for the fourth week

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in a row. Rates averaged 4.17 percent with an average 0.7 point this week, sliding down from 4.2 percent last week and notably lower than last year's average of 5.06 percent. Freddie Mac said rates have not been lower since it began tracking 15-year fixed-rate mortgages in August of 1991.

Bankrate reported the same trend of declining interest rates, also citing last week's disappointing employment report as the main cause for the week-to-week drop. With just 41,000 new jobs added to private sector payrolls in May, the tracking company said this weak growth called into question the overall strength and sustainability of the U.S. economic recovery.

""Nervous investors again piled into the safe haven of U.S. Treasury notes, which helped bring mortgage rates to previously unseen levels,"" Bankrate said in its report. ""Weak hiring will further postpone the timeframe when the Federal Reserve begins boosting short-term interest rates, which is also helping keep mortgage rates low.""

According to Bankrate's ""weekly national survey"":http://investor.bankrate.com/releasedetail.cfm?ReleaseID=478262, 30-year fixed-rate mortgages came in at 4.88 percent with an average 0.5 point this week, down from 4.95 percent the week prior. Additionally, the tracking company said 15-year fixed-rate mortgages averaged 4.33 percent with an average 0.45 point, falling from last week's average of 4.36 percent.

Complementing Bankrate's survey is its weekly Rate Trend Index, in which mortgage experts predict which way rates are headed over the next week. The majority of panelists â€" 56 percent â€" said mortgage rates will remain relatively unchanged over the next seven days, and the remaining 44 percent forecast a rise in rates.