Long-term Mortgage Rates Keep Falling

By:: Kirk Haverkamp | August 26, 2010

And they keep going down, with no bottom in sight.

Fixed-rate mortgages fell again to new lows this past week, with both the 30- and 15-year loans setting record lows in the weekly Freddie Mac rate survey. The average interest rate on 30-year fixed-rate mortgages fell to 4.36 percent, down from 4.42 percent last week, while the 15-year loan dropped to 3.86 percent, down from 3.90 last week.

Average rates on long-term mortgages have now fallen for nine out of the past 10 weeks. The average rate on the 5-year Treasury indexed adjustable rate mortgage is also at a record low, remaining unchanged from last week’s average of 3.56 percent.

The 30-year rate average included an average 0.7 points in fees and discounts; the average on the other two was 0.6 points. All are based on 80-percent loan-to-value ratios.

The drop in rates appeared to be link to the decline in the housing market, according to Amy Crews, deputy chief economist for Freddie Mac. She noted that the sharp declines reported this week for new and existing home sales generated concerns that the housing market may slow the economic recovery, causing long-term bond yields to decline, with mortgage rates following suit.

The National Association of Realtors reported Tuesday that existing home sales fell 27 percent in July, with the Commerce Department reporting yesterday that new home sales fell 12 percent and reached their lowest level in 50 years during the month.

Crews said that much of the slowdown was expected, owning to the expiration of the homebuyer tax credit at the end of April. At the same time, she noted that home prices appear to be stabilizing, with prices rising 0.9 percent in the second quarter of the year after 11 consecutive quarters of declines, according to the Federal Home Finance Agency’s seasonally adjusted purchase-only index.

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National Rates

Loan Type	Today	+/-
30 yr fixed	3.72
15 yr fixed	3.03
5/1 ARM	2.75

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