Mortgage Rates Set Record Lows for Second Week

By:: Kara Johnson | July 01, 2010

Mortgage interest rates fell to new lows again this week, with 30- and 15-year fixed-rate loans and 5-year adjustable rate mortgages (ARMs) all breaking their previous records set just last week.

According to the Freddie Mac weekly rate survey, average interest rates on 30-year fixed-rate mortgages fell to 4.58 percent, down from last week’s all-time low of 4.69 percent. Rates on 15-year loans dropped to 4.04 percent, down from 4.13 percent last week, and the initial rate on 5-year Treasury indexed ARMs fell to 3.79 percent, down from last week’s record low of 3.84 percent.

The only rate in the survey that didn’t set a new record was the 1-year Treasury indexed ARM, which rose to an average of 3.80 percent, up from 3.77 percent last week. All four rates averaged 0.7 points in fees and discount points.

Frank Nothaft, Freddie Mac vice president and chief economist, noted that the new lows come during at a time when the economy is struggling to gain momentum and inflation remains unusually low.

.“Growth estimates for first quarter GDP were revised down by a half percentage point over the past two months to 2.7 percent, according to the Bureau of Economic Analysis,” Nothaft said. “Annual inflation, as measured by the 12-month change in the core CPI, held at 0.9 percent in April and May, which is the slowest pace in over 44 years, as reported by the Bureau of Labor Statistics.”

The current spate of record low interest rates have confounded expectations from earlier this year, when most observers expected rates would rise once the Federal Reserve ceased its program of buying mortgage securities at the end of March.

Instead, rates have fairly steadily declined over the past three months, spurring renewed interest in mortgage refinancing, but apparently not bringing homebuyers back into the market. The Mortgage Bankers Association reported Wednesday that applications for home purchase mortgage applications have declined in seven of the last eight weeks since the April 30 deadline for finalizing home sales contracts in order to qualify for up to $8,000 in homebuyer tax credits.

The Freddie Mac weekly survey covers conforming loans reported to it over the Monday through Wednesday immediately preceding the release of the survey on Thursday morning.

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

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