By Mark Huffman
ConsumerAffairs.com
July 2, 2010
Mortgage rates -- already at a record low -- have fallen even more, reaching another all-time low. Freddie Mac reports the average 30-year fixed rate mortgage (FRM) hit 4.58 percent for end week ending July 1.
The 15-year FRM this week averaged 4.04 percent with an average 0.7 point, down from last week when it averaged 4.13 percent. A year ago at this time, it averaged 4.77 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.79 percent this week, with an average 0.7 point, down from last week when it averaged 3.84 percent. A year ago, the 5-year ARM averaged 4.88 percent.
The 1-year Treasury-indexed ARM averaged 3.80 percent this week with an average 0.7 point, up from last week's average of 3.77 percent. At this time last year, the 1-year ARM averaged 4.94 percent.
"Interest rates on fixed-rate mortgages and the 5-year hybrid ARM fell once again to all-time record lows this week in a period where the economy struggles to gain momentum and inflation remains very low," said Frank Nothaft, Freddie Mac vice president and chief economist. "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. 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."
One reason rates continue to fall is the old principal of supply and demand. Fewer buyers are in the market seeking new mortgages. Many who can qualify have already refinanced existing mortgages.
"Refinance applications remain at about half the level seen in the spring of 2009," said Michael Fratantoni, the Mortgage Bankers Association's Vice President of Research and Economics. "Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows."
The last time mortgage rates were this low occurred in the 1950s. At that time, however, mortgage loans only last 20 or 25 years.
