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Once again, the economy drags mortgage rates to new lows

By Palm Beach Business.com

DELRAY BEACH — It seems that there is no limit to how far mortgage rates will sink, especially with the weak economy.  For the second time in a month, rates set record lows in both the Freddie Mac and Bankrate surveys.

Freddie Mac’s Primary Mortgage Market Survey found the average 30-year fixed-rate mortgage dropping to 4.12 percent with 0.7 point, down from last week’s 4.22 percent. Bankrate’s national mortgage survey had the 30-year averaging 4.35 percent with 0.38 point, down from 4.37 percent a week ago.

Mortgage rates tend to follow long-term Treasury bonds, particularly the 10-year bond. Yields on the 10-year fell below 2.0 percent on Tuesday.

"Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields and allowed fixed mortgage rates to hit new lows this week,” Freddie Mac Chief Economist Frank Nothaft said. “On net, the economy added no new jobs last month and was the weakest reading since September 2010. Meanwhile, the unemployment rate remained at 9.1 percent, marking its 31st consecutive month of being above 8 percent, the longest such stretch in 70 years.”

Bankrate noted that while the Federal Reserve may take steps to further reduce these long-term interest rates in hopes of bringing mortgage rates still lower, “expanding the pool of eligible refinancers would make the low mortgage rates more impactful on the economy.”

Also from the survey, the 15-year fixed-rate mortgage dropped to 3.33 percent with 0.6 point, down from 3.39 percent a week earlier, according to Freddie Mac; in the Bankrate survey, the 15-year held steady at 3.48 percent with 0.35 point.

 

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SEPTEMER 8, 2011 click to go home
 
         
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