""Freddie Mac"":http://www.freddiemac.com released the results of its weekly rate survey Thursday, showing mortgage rates have dropped sharply over the past few days amid falling bond yields and signs of a weaker-than-expected economy.[IMAGE]
The 30-year fixed-rate mortgage has declined to its lowest level for 2011, while both the 15-year fixed and 5-year adjustable-rate mortgage (ARM) set new historical record lows. Of the four loan types the GSE assesses, only the 1-year ARM failed to post a decline this week.
According to Freddie MacÃ¢â‚¬â„¢s ""weekly market survey"":http://www.freddiemac.com/pmms/, the 30-year fixed-rate mortgage averaged 4.39 percent (0.8 point) for the week ending August 4. ThatÃ¢â‚¬â„¢s down 16 basis points from last weekÃ¢â‚¬â„¢s average of 4.55 percent and the lowest 30-year rate FreddieÃ¢â‚¬â„¢s reported since November of last year.
The 15-year fixed-rate mortgage came in at 3.54 percent (0.7 point) this week, down from 3.66 percent last week and the lowest on record, according to the GSE. A year ago at this time, the 15-year rate averaged 3.95 percent.[COLUMN_BREAK]
FreddieÃ¢â‚¬â„¢s study puts the 5-year ARM at 3.18 percent (0.6 point) this week. Last week it was averaging 3.25 percent, and this time last year it was 3.63 percent.
The average rate on a 1-year ARM rose to 3.02 percent (0.5 point) this week. Its low for the year was hit last week at 2.95 percent. At this time last year, the 1-year ARM averaged 3.55 percent.
Freddie MacÃ¢â‚¬â„¢s survey results are based on mortgage rate data collected from about 125 lenders across the country.
Frank Nothaft, Freddie MacÃ¢â‚¬â„¢s chief economist, says Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought, with mortgage rates for the most part following yields downward.
Ã¢â‚¬Å“The economy grew 1.3 percent in the second quarter, which was below the market consensus forecast, and first quarter growth was cut to less than a quarter of what was originally reported,Ã¢â‚¬Â Nothaft explained.
Ã¢â‚¬Å“The first half of this year was the worst six-month period since the economic recovery began in June 2009,Ã¢â‚¬Â he said. Ã¢â‚¬Å“Moreover, consumer spending fell 0.2 percent in June, representing the first decline since September 2009.Ã¢â‚¬Â
On a positive note, Nothaft says there are indications that the housing market is firming.
He says real residential fixed investments added to the economy in the second quarter, after subtracting from growth during the first three months of the year.
Nothaft also notes that CoreLogicÃ¢â‚¬â„¢s measurement of home prices has seen its first consecutive three-month gain since June 2010, and pending sales of existing homes rose 20 percent in June from year-ago levels.