Mortgage Rates Still Falling

By:
Kara Johnson | October 07, 2010

Mortgage rates continue to fall, hitting record lows for both fixed- and adjustable rate mortgages in the weekly Freddie Mac survey. 

Interest rates on 30-year fixed rate loans dropped to an average of 4.27 percent this week, while 15-year loans fell to an average of 3.72 percent. The average initial rate on 5-year Treasury indexed adjustable rate mortgages (ARMs) dropped to 3.47 percent. All are the lowest ever reported in the Freddie Mac survey.
 
Last week’s rates were 4.32 percent, 3.75 percent and 3.52 percent, respectively.
 
The steady decline in mortgage rates through most of the year have generally been attributed to lowering inflationary pressures, as noted by Frank Northaft, Freddie Mac chief economist.
 
“The 12-month growth rate in the core price for personal consumption, which the Federal Reserve closely tracks, has been drifting lower over the past six months ending in August and suggests inflation is running at a tepid pace at best.” Nothaft said. “This allowed mortgage rates to ease to new or near-record lows this week.”
 
Low interest rates helped pending home sales, as reported by the National Association of Realtors, rise to the highest level in four months, Nothaft said, noting that mortgage applications for home purchases have increased 14 percent since the end of August.

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