Freddie Mac: Low inflation pushes mortgage rates lower
By Palm Beach Business.com
DELRAY BEACH — Interest rates continue to do what they’ve done since Spring: Set record lows.
The 30-year fixed rate mortgage dropped to 4.27 percent with an average 0.8 point this week, down from 4.32 percent a week ago, according to Freddie Mac’s Primary Mortgage Market Survey. The survey found the 15-year fixed rate mortgage and the five-year adjustable rate mortgage also setting records.
Bankrate.com’s national survey also found the 30-year dropping to a record low, to 4.45 percent with 0.32 point, down from 4.50 percent a week ago.
Freddie Mac cited low inflation as one of the forces pushing down interest rates.
"The 12-month growth rate in the core price index for personal consumption, which the Federal Reserve closely tracks, has been drifting lower over the past six months ending in August and suggests inflation is running at a tepid pace at best,” said Freddie Mac’s Chief Economist Frank Nothaft. “This allowed mortgage rates to ease to new or near record lows this week.”
Bankrate cited expectation by investors that the Federal Reserve will act to stimulate the economy, and bought up government securities, driving down interest rates in the process. Mortgage rates tend to be pegged to government bond rates, particularly the 10-year bond.
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