Mortgage Rates Hit New Record Lows

Mortgage rates fell to new lows this week, with the averages on both 30- and 15-year fixed-rate home loans setting new records in the weekly Freddie Mac rate survey.

The average on 30-year fixed-rate mortgages dropped to 3.34 percent, down from last week’s average of 3.40 percent and exceeding the previous record of 3.36 percent set the week of Oct. 4. Meanwhile, the average rate on 15-year fixed-rate mortgages dropped to 2.65 percent, down from 2.69 percent last week. The previous record low of 2.66 percent was set the week of Oct. 18.

One year ago this week, 30-year fixed-rate mortgages were averaging 4.00 percent and 15-year mortgages were at 3.31 percent, according to Freddie Mac figures.

Interest rates on adjustable-rate mortgages (ARMs) have fallen far less during that period. Initial rates on 5-year ARMs edged up slightly this past week, to 2.74 percent, up from 2.73 percent last week, and down from 2.97 percent one year ago.

Fixed rates fell this week despite consumer confidence reaching its highest level since July 2007, according to the widely used University of Michigan index. Signs of a stronger economy normally tend to boost interest rates.

Mortgage demand rises

The drop in fixed mortgage rates comes on the heels of another report indicating that mortgage demand surged last week after being temporarily depressed by Superstorm Sandy. The Mortgage Bankers Association reported Wednesday that mortgage applications shot up a seasonally adjusted 12.6 percent last week after a smaller downturn the week before.

Applications to refinance an existing mortgage were up 13 percent compared to the week before, while purchase applications rose by 11 percent. Both increases are about twice as large as the storm-related decreases of the preceding week.

Purchase applications were 22 percent higher than the same week one year ago; comparable figures for refinancing were not provided.

First published at: http://www.mortgageloan.com/mortgage-rates-hit-new-record-lows-9296