How low can we go? When it comes to mortgage rates, the floor keeps dropping. Industry reports released Thursday show that interest rates for home loans Ã¢â‚¬" already at their lowest marks in more than a half-century Ã¢â‚¬" dropped again this week.[IMAGE]
Market analysis conducted by ""Freddie Mac"":http://www.freddiemac.com/pmms/release.html?week=39&year=2010&display=release found that the 30-year fixed-rate mortgage (FRM) averaged 4.32 percent (0.8 point) for the week ending September 30, 2010. That's down from 4.37 percent last week and tied with the all-time low in Freddie's survey set four weeks ago.
The GSE reported that the 15-year FRM this week averaged a new record low of 3.75 percent (0.7 point). Last week, it came in at 3.82 percent.
The 5-year adjustable-rate mortgage (ARM) dropped to an average of 3.52 percent this week (0.6 point), according to Freddie Mac, also setting a new record low. The 1-year ARM rose slightly to 3.48 percent (0.7 point).
""Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week,"" said Frank Nothaft, Freddie Mac's VP and chief economist.[COLUMN_BREAK]
Weakening confidence in the economy's trajectory was evident despite notable improvements in household balance sheets. Nothaft cited a Federal Reserve report, which shows that homeowners have regained $1.0 trillion in home equity as of the second quarter of 2010, after losing more than $7.5 trillion over the three-year period ending in the first quarter of 2009.
A separate weekly ""study by Bankrate"":http://www.bankrate.com/RTI also put mortgage interest rates at record-lows. Bankrates 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 rates for conforming 30-year fixed mortgages remained unchanged this week at their 4.5 percent low (0.36 point).
The average 15-year fixed mortgage retreated to 3.94 percent (0.31 point), down from 3.96 percent last week, while the larger jumbo 30-year fixed rate inched lower to 5.16 percent.
Bankrate says adjustable rate mortgages hit new lows also, with the average 5-year ARM decreasing to 3.68 percent and the average 7-year ARM falling to 3.91 percent.
According to Bankrate, mortgage rates remain at record lows, not as a result of poor economic data, but rather in expectation of additional efforts by the Federal Reserve to revive the economy.
Ã¢â‚¬Å“Specifically, investors are counting on the Fed to resume quantitative easing - purchases of government bonds in an effort to drive market interest rates even lower,Ã¢â‚¬Â the company said in its report. Ã¢â‚¬Å“Investors have been front-running the Fed by buying government debt now, bringing bond yields to ultra-low levels. Mortgage bond investors are pricing for the risk that loans could be refinanced if the Fed's efforts reduce mortgage rates further.Ã¢â‚¬Â