Mortgage Rates Fall to Record Lows Due to Disappointing Economic Data

Following a run of disappointing economic data â€" from housing, to jobs, to consumer spending â€" mortgage rates fell to record lows for the week ending June 24, 2010, ""Freddie Mac"":http://www.freddiemac.com/ and ""Bankrate"":http://www.bankrate.com/ reported Thursday.

[IMAGE]

According to Freddie Mac's Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 4.69 percent with an average 0.7 point this week, down from last week's average of 4.75 percent. This, Freddie Mac said, is the lowest rate recorded since it began collecting rates for 30-year fixed loans in April 1971.

Freddie Mac also reported a decline in 15-year fixed-rate mortgages, which averaged 4.13 percent with an average 0.6 point this week, falling from 4.2 percent the week prior. Again, Freddie Mac said this marks the lowest rate documented in the survey since it began tracking 15-year fixed-rate mortgages in September 1991.

""Mortgage rates . . . hit all-time record lows this week in our survey while activity in housing market slowed in May following the expiration of the homebuyer tax credit,"" said Frank Nothaft, Freddie Mac VP and chief economist.

[COLUMN_BREAK]

Bankrate reported the same trend in declining rates and agreed that the disappointing economic data has kept mortgage rates on a downswing.

""Even the Federal Open Market Committee struck a more cautious tone in their post-meeting statement issued Wednesday,"" Bankrate said. ""Nervous investors around the globe continue to buy Treasury securities, driving both bond yields and mortgage rates lower.""

The tracking company explained that mortgage rates are closely tied to yields on long-term government debt. As a result, lingering doubt about the sustainability of the U.S. economic recovery will keep mortgage rates near present levels, Bankrate said.

According to its weekly national survey, which is conducted from data provided by the top 10 bank and thrifts in the top 10 markets, 30-year fixed-rate mortgages averaged 4.81 percent with an average 0.44 point this week, dropping from 4.88 percent last week. Additionally, Bankrate said 15-year fixed-rate mortgages averaged 4.26 percent with an average 0.42 point this week, down from last week's average of 4.32 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. More than half of the panelists â€" 55 percent â€" said mortgage rates will remain more or less unchanged over the next seven days, while 35 percent said mortgage rates will rebound from current lows. The remaining 10 percent said rates will fall even further over the coming week.