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Freddie Mac: Mortgage continue downward spiral

By Palm Beach Business.com

DELRAY BEACH — There seems to be no limit as to how far mortgage rates might fall. Economic uncertainties have pushed rates to new lows for a sixth consecutive week, according to Freddie Mac.

The 30-year fixed-rate mortgage hit an average of 3.67 percent with 0.7 point, down from last week’s 3.75 percent, according to Freddie Mac’s Primary Mortgage Market Index, released Thursday.  The 15-year fixed-rate dropped to 2.94 percent with 0.7 point, down from last week’s average of 2.97 percent.

A year ago, the 30-year averaged 4.49 percent; the 15-year averaged 3.68 percent.
Meanwhile, Bankrate’s national mortgage survey found the 30-year dropping to an average of 3.92 percent with 0.42 point from 3.94 percent a week ago. The 15-year actually ticked up to 3.16 percent with 0.36 point from 3.15 percent a week ago.

The drop in rates wasn’t surprising, considering what happened to Treasury bond yields, especially afte Friday’s jobs report from the Labor Department. Yields on the 10-year bond dropped 12 basis points between Thursday and Friday. Mortgage rates tend to follow yields on government securities.

"Fixed mortgage rates reached new record lows for the sixth consecutive week as long-term Treasury bond yields declined further following downwardly revised economic growth and job creation data,” Freddie Mac Chief Economist Frank Nothaft said. “Gross domestic product rose 1.9 percent in the first quarter, after originally being reported as 2.2 percent, led by gains in inventories, more government cutbacks and the slowest increase in corporate profits in over three years.

“In addition, the economy added 69,000 jobs in May, less than half of the market consensus forecast and revisions subtracted a total of 49,000 workers in March and April. Lastly, the unemployment rate ticked up from 8.1 percent in April to 8.2 percent."

Bankrate’s mortgage experts, however, are predicting the trend won’t continue, however. More than three-quarters of the members of its mortgage panel expect rates to rise over the coming week.