Japanese disaster helps lower mortgage rates sharply

By Palm Beach Business.com

DELRAY BEACH — First, the disaster in Japan helped slow the rapid rise of gasoline prices. Now, it’s pushing down mortgage rates, and sharply so.

Freddie Mac’s  Primary Mortgage Market Survey released Thursday found  the 30-year fixed-rate mortgage dropping to 4.76 percent with 0.7 point from 4.88 percent a week ago.

Bankrate’s national mortgage survey spotted the 30-year at 4.91 percent with 0.38 point, down from 5.04 percent a week ago. It was the first time in two months that the Bankrate survey fell below 5.00 percent. The Bankrate survey tends to track slightly higher than Freddie Mac’s, although the two generally show the same rate trends.

Both surveys cited the shock on the financial system created by the disaster in Japan as the major factor in bringing rates down.

"With the crisis in Japan, investors rushed to buy the security of U.S. Treasury bonds , which lowered its yields and other interest rates as well,” Freddie Mac Chief Economist Frank Nothaft said. “This allowed fixed mortgage rates to drift lower this week.”

Mortgage rates tend to be linked to long-term Treasury securities, particularly the 10-year bond.

The 15-year fixed rate dropped to 3.97 percent with 0.7 point, down from 4.15 percent a week earlier, according to Freddie Mac. Bankrate had the 15-year at 4.12 percent with 0.38 point, down from 4.32 percent a week ago.

Bankrate’s mortgage experts generally see rates moving even lower over the next week.