Economic worries continue to push mortgage rates down

By Palm Beach Business.com

DELRAY BEACH — Continued uncertainty about the state of the economy continues to push mortgage rates to record lows.

Freddie Mac’s Primary Mortgage Market Survey found the 30-year fixed-rate mortgage dropping to an average of 4.58 percent with an average 0.7 point from 4.69 percent a week ago. A year ago at this time, the 30-year averaged 5.323 percent.

Bankrate’s national survey put the 30-year at 4.75 percent with 0.41 point, down from 4.81 percent a week ago.

“Interest rates on fixed-rate mortgages and the 5-year hybrid ARM fell once again to all-time record lows this week in a period where the economy struggles to gain momentum and inflation remains very low,” Freddie Mac Chief Economist Frank Nothaft, said. “Growth estimates for first quarter GDP were revised down by a half percentage point over the past two months to 2.7 percent, according to the Bureau of Economic Analysis . Annual inflation, as measured by the 12-month change in the core CPI, held at 0.9 percent in April and May, which is the slowest pace in over 44 years, as reported by the Bureau of Labor Statistics.”

Concerns over the economy, evidenced by the drop in stocks, is pushing investors into the relative safety of Treasury bonds and bills. The demand has pushed yields on the benchmark 10-year Treasury bond below 3.00 percent this week for the first time in more than a year. Mortgage rates tend to move in concert with the 10-year bond.

Other rates from the two surveys: Freddie Mac put the 15-year mortgage at 4.04 percent, with an average 0.7 point, down from 4.13 perent a week earlier. The five-year adjustable rate mortgage dropped to an average of 3.79 percent with an average of 0.7 point, down from 3.84 percent a week earlier.

Bankrate’s survey put the 15-year at 4.20 percent with 0.40 point, down from 4.26 percent a week ago; the five-year ARM dropped to 4.07 percent with 0.32 points, down from 4.13 percent a week ago.

Will the drop in rates continue? Bankrate’s panel of experts are split. More see rates rising (43 percent) than falling (19 percent) but a sizable chunk (38 percent) see rates holding steady.

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