Mortage Rates Hit Record Lows - Again

By:
Kirk Haverkamp | November 25, 2009

Mortgage rates fell to record lows again this week, setting or matching all-time records in two major weekly surveys.

Average rates on 30-year fixed rate mortgages fell to 4.78 percent with 0.7 discount points in the weekly rate survey by Freddie Mac, which is generally considered the nation’s leading mortgage rate survey. The figure, down from 4.83 percent last week, tied the survey’s previous low set last April 30.
 
Meanwhile, average rates on15-year fixed rate mortgages fell again, besting the previous record low set last week in the Freddie Mac survey. The average rate of 4.29 percent with 0.7 discount points is the lowest ever recorded since the government-supported lender began tracking the data in 1991. The previous low last week was 4.32 percent.
 
Meanwhile, a new record low was set in the weekly Bankrate survey, where the average on 30-year fixed rate mortgages was reported at an even 5 percent, the lowest since that survey began in 1985. The Bankrate survey typically runs higher than other weekly mortgage reports due to differing survey methods.
 
The Bankrate figure was down from 5.06 percent the week before and averaged 0.44 discount points. The 15-year average rate was down 1 basis point this week, to 4.47 percent.
 
Average rates on five-year adjustable rate mortgages (ARMs) also hit record lows in both surveys. The average rate on a Treasury indexed hybrid 5/1 ARM fell to 4.18 percent on 0.6 discount points in the Freddie Mac survey, down from 4.25 percent last week. The Bankrate survey reported an average of 4.54 percent on benchmark 5/1 ARMs, down four basis points from last week.
 
It’s useful for consumers to consult multiple rate surveys to get a better feel for what the mortgage market is doing, since actual rates will vary by lender, region and the borrower’s credit score and other criteria.
 

Refinancing declines despite low rates

 
However, the new record lows do not appear to be generating strong interest among consumers, at least as far as refinancing is concerned. Unlike last spring, when rates fell to then-record lows and triggered a massive increase in applications to refinance mortgages, consumers seem to be greeting the current rates with a yawn. The Mortgage Bankers Association reports that its Mortgage Refinance Applications Index actually fell by 9.5 percent last week, on top of a slight decrease the week before.
 
Purchase applications rose by 9.6 percent from the previous week, on a seasonally adjusted basis, although purchase applications tend to be less responsive to short-term changes in mortgage rates due to the time required by the home-shopping process. Refinance applications continue to make up more than 70 percent of all mortgage applications, down from more than 85 percent at the peak of demand last spring.
 
The trend suggests that most homeowners who are interested in and can qualify for a refinanced mortgage may have already done so, and that the current low rates may not generate much additional interest. However, with the extension of the first-time homebuyer’s tax credit to April 30 and the addition of a credit for repeat home buyers, purchase applications may continue to gain in coming months, provided that rates remain low.

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