Mortgage Rates Drop for Second Straight Week

Another week of dismal economic data have again pushed down mortgage rates. Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 6.14 percent, down from 6.20 percent last week. This demonstrates a steep decline from 6.46 percent two weeks prior.

The market continues to be battered by one daunting economic indicator after another, all pointing to prolonged recession.

Early in the week analyst were hit with a staggering pronouncement of over a half million new job losses for October, with 516,000 people filling first time unemployment claims. Unemployment figures have now hit the highest levels since post 9/11 and at 6.5 percent have jumped to 14 year highs. Analyst and economist are now at a consensus that unemployment may cross 8 percent by year-end.

Meanwhile, the US Treasury reported the single largest monthly deficit in history. In October, the US amassed another $237.2 billion in debt. At this accelerating pace of increased deficit spending the US Treasury is projected to run $1 trillion in the red for 2008.

All of these mounting recessionary pressures are increasing financial markets confidence that the Federal Reserve will again cut benchmark rates at their December meeting, the final of 2008.

Mortgage rates have now edged below 2007 averages. The 30-year fixed-rate mortgage was at a nationwide average of 6.24 percent a year ago, as compared to the current 6.14 percent.

Obviously, this is sending a lot of concerned homeowners to their mortgage brokers and bankers looking to re-evaluate their current adjustable rate mortgages.

The overall weekly mortgage applications, as reported by the Mortgage Bankers Association, jumped 11.9 percent. However, mortgage refinance activity was much higher with an increase of 16.1 percent and refinance applications climbing to 45 percent of all mortgage applications.