Low confidence in economy pushes mortgage rates down

By Palm Beach Business.com

DELRAY BEACH — The shaky economic recovery continues to push mortgage rates southward.

Freddie Mac Thursday reported that the average 30-year fixed rate mortgage dropped to 4.56 percent with 0.7 point, down from 4.57 percent a week ago. By comparison, a year ago the 30-year averaged 5.20 percent.

Bankrate.com said its national mortgage survey has the 30-year at 4.74 percent with 0.39 point, down from last week’s 4.77 percent. This week’s rate ties the all-time low for Bankrate’s survey set earlier this month.

Palm Beach Business.com’s South Florida survey found the 30-year averaging 4.60 percent with 0.71 point, same as two weeks ago. SunTrust Bank offered rates as low as 4.374 percent with 1.375 point.

“The decline in mortgages rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors,” Freddie Mac Chief Economist Frank Nothaft said. “For example, homebuilder confidence declined in July to lows not seen since April 2009, as measured by the NAHB/Wells Fargo Housing Market Index, following the large drop in housing starts reported for June. Similarly, July’s consumer confidence dropped to the lowest level since August 2009, based on the Reuters/University of Michigan’s Consumer Sentiment index.“

That decline in confidence pushes investors away from stocks toward the relative safety of Treasury securities, with the yield on the 10-year bond dropping to 2.90 percent on Wednesday, its lowest point in more than a year. Mortgage rates tend to be pegged to the 10-year Treasury bond.

Freddie Mac also found the 15-year mortgage dropping to 4.03 percent with 0.7 point, and the five-year adjustable rate mortgage dropping to 3.79 percent, also with 0.7 point.
Bankrate’s survey put the 15 year at 4.18 percent with 0.37 point, and the five year ARM at 4.06 percent with 0.26 point.

Bankrate’s panel of mortgage experts overwhelmingly sees rates holding right where they are over the next week or so. Two-thirds see little movement in rates, while 22 percent see rates moving higher and 11 percent falling further.