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Bankrate, Freddie Mac see mortgages rates falling again

By Palm Beach Business.com

DELRAY BEACH — Mortgage rates continue fall to ridiculously low levels as investors continue to view the economy with nervous caution and the risk of inflation remains nearly nonexistent. Freddie Mac’s Primary Mortgage Market Survey found the 30-year fixed-rate mortgage falling to 4.32 percent with 0.7 points from 4.36 percent a week earlier.

Bankrate’s national mortgage survey put the 30-year at 4.53 percent with 0.42 points, down from last week’s 4.57 percent. Both the Bankrate and Freddie Mac averages are record lows.

Bankrate cited uncertainty over the economy that has driven rates down since May. In uncertain times, investors tend to put their money in Treasury bonds and bills, a relatively safe harbor in comparison to the volatility of the stock market. That drives down interest rates.

While low mortgage rates have produced a surge in refinancing activity, they aren't packing the same punch on home purchases because would-be buyers can’t sell the homes they now own, are nervous about their jobs, or remain convinced that home prices have further to fall.  Banks also tend to have higher lending standards, making mortgages tougher to come by for many potential buyers.

Said Amy Crews Cutts, deputy chief economist at Freddie Mac: "The 12-month price growth of core personal expenditures remained at 1.4 percent in July, which kept overall inflation expectations well at bay. Fed chairman Bernanke reiterated this in his August 27th speech in Wyoming, noting that with inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly. As a result, mortgage rates eased further this week to new historic lows.”

Meanwhile, Bankrate’s panel of mortgage experts sees rates likely staying put over the short term.  Slightly more than half see no movement over the next week, while 24 percent see rates falling further and 24 percent see rates rising.

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SEPTEMBER 2, 2010 click to go home
 
         
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