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Freddie, Bankrate: Mortgage rates drop — with a twist

By Palm Beach Business.com

DELRAY BEACH — Mortgage rates fell once again to record lows over the past week, according to Freddie Mac and Bankrate, but that isn’t what’s different about the current reports. After all, declining rates have been the rule this year, not the exception.

Analysts cited low inflation and Federal Reserve action to keep rates low, for once not pointing to the crisis in Europe or disappointing economic news as the major catalysts.

The 30-year, fixed-rate mortgage dropped to an average of 3.53 percent with 0.7 point from 3.56 percent a week ago, according to Freddie Mac’s Primary Mortgage Market Survey. That’s nearly a full point south of where rates were a year ago.

Bankrate also had the 30-year setting a record low, dipping to 3.78 with 0.43 point from 3.79 percent a week ago.

“With little signs of inflation and the Federal Reserve's "Operation Twist" keeping U.S. Treasury bond yields in check, fixed mortgage rates are remaining low and helping to stir the housing market,” Freddie Mac Chief Economist Frank Nothaft said. “For instance, the 12-month growth rate in the core Consumer Price Index has been in a narrow 2.1 to 2.3 percent band over the past nine months ending in June.

“Meanwhile, new construction on one-family homes rose for the fourth consecutive month in June to its strongest pace since April 2010 with builders restocking their lean inventories of new homes.  In fact, homebuilder confidence for the next six months rose for the third month in a row in July to its highest reading since March 2007."

The 15-year fixed-rate mortgage dropped in both surveys, to 2.83 percent with 0.6 point, according to Freddie, and to 3.04 percent with 0.32 point in the Bankrate survey.