Mortgage Rates Resume Decline, Reach Record Low

After slowly climbing for several weeks, mortgage rates have fallen again, and hit another new low.

The rate for the average 30-year fixed rate loan hit 4.17 percent in the week that ended today, according to Freddie Mac. The average rate for the previous week was 4.24 percent.

The 15-year and 1-year ARM rates are also at record lows in the latest week.

"Following the Federal Reserve 

The rates

• 30-year fixed rate mortgage  (FRM) averaged 4.17 percent with an average 0.8 point for the week ending November 11, 2010, down from last week when it averaged 4.24 percent. Last year at this time, the 30-year FRM averaged 4.91 percent.
  
• 15-year FRM this week averaged 3.57 percent with an average 0.8 point, down from last week when it averaged 3.63 percent. A year ago at this time, the 15-year FRM averaged 4.36 percent.
  
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.25 percent this week, with an average 0.7 point, down from last week when it averaged 3.39 percent. A year ago, the 5-year ARM averaged 4.29 percent.
  
• 1-year Treasury-indexed ARM averaged 3.26 percent this week with an average 0.7 point, unchanged from last week when it also averaged 3.26 percent. At this time last year, the 1-year ARM averaged 4.46 percent.
  

"Despite historically low mortgage rates, however, the housing recovery continues to be slow owing in part to household job uncertainty and tight credit conditions," Northaft said. "The unemployment rate has remained at 9.5 percent or higher for the past 15 months, while commercial banks tightened lending standards in 16 of the last 17 quarters, according to the Fed's Senior Loan Officer Opinion Survey."

Borrowing activity rises

While home sales continue to lag, there are signs that lower rates are beginning to attract borrowers. The Mortgage Bankers Association reports its Market Composite Index, a measure of mortgage loan application volume, increased 5.8 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 5.4 percent compared with the previous week.

True much of that activity was in the area of refinancing. The Refinance Index increased 6.0 percent from the previous week.  But the seasonally adjusted Purchase Index increased 5.5 percent from one week earlier. This is the third consecutive weekly increase in purchase applications, MBA said.

 The unadjusted Purchase Index increased 3.1 percent compared with the previous week and was 14.0 percent lower than the same week one year ago. The conventional purchase index increased 5.4 percent to its highest level since May of this year, on a seasonally adjusted basis. On a non-seasonally adjusted basis, the conventional purchase index was at the highest level observed since early October.

"The increases in purchase applications we have seen over the past couple of weeks align with the better than expected news from October's employment report and other data indicating some improvement in the economy's growth prospects," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "Refinance applications increased as rates continued to hover near record lows."