Thirty-Year Fixed Mortgage Rate Drops to 4%

Mortgage interest rates dropped sharply this week as investors rushed to U.S. Treasury bonds amid concerns over the European debt crisis.

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Data released by ""Freddie Mac"":http://www.freddiemac.com Thursday puts the average rate for a 30-year fixed mortgage at 4.00 percent (0.7 point) for the week ending November 3rd. That marks its second lowest reading since hitting an all-time low of 3.94 percent in early October.

The 30-year rate fell 10 basis points from 4.10 percent last week. Last year at this time, it was averaging 4.24 percent.

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The GSE’s ""regular weekly survey"":http://www.freddiemac.com/pmms/ averages rate data from 125 lenders across the country.

This week, the 15-year fixed-rate mortgage came in at 3.31 percent (0.7 point). It fell almost as much, down from 3.38 percent last week. A year ago at this time, the 15-year fixed rate was 3.63 percent.

Adjustable-rate mortgages (ARMs) declined as well this week. The 5-year ARM dropped from 3.08 percent last week to 2.96 percent (0.6 point). The 1-year ARM slipped from 2.90 percent to 2.88 percent (0.6 point).

""Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates,” explained Frank Nothaft, Freddie Mac’s chief economist. “Meanwhile, on the home front, the U.S. economy continued its gradual recovery.”

Nothaft pointed to stats from the Bureau of Economic Analysis, which showed the economy grew 2.5 percent in the third quarter, the strongest pace in a year, as consumers stepped up spending.

Consumer sentiment, as measured by the Thomson Reuters/University of Michigan index, rose for the second month in a row in October. Nothaft notes that last month’s reading was the highest since July.