Oct
07

Mortgage Rates Tumble Down to New Record Lows

October 07, 2010

Last month, Chicagoland Real Estate Forum reported that the 30-year mortgage rate had risen for the first time in three months.

Now we’re here to tell you that it has dropped back down to a new record low.

Freddie Mac said Thursday that for the week ending October 7, the 30-year fixed-rate mortgage rate averaged 4.27 percent, the lowest level in the survey’s almost 40-year history.

Last month, the 30-year FRM jumped to 4.37 percent before coming back down. Last week, the rate was 4.32 percent.

Mortgage Rates Post New LowsThe 15-year fixed-rate also broke the survey’s all-time low, recording an average of 3.72 percent. Last week, the 15-year FRM was 3.75 percent. A year ago at this time, it was 4.33 percent. Freddie Mac has been tracking the 15-year rate since 1991.

“The 12-month growth rate in the core price index 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,” said Frank Nothaft, vice president and chief economist of Freddie Mac. “This allowed mortgage rates to ease to new or near record lows this week.”

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also hit a new low, averaging 3.47 percent this week, down from 3.52 percent last week.

The 1-year Treasury-indexed ARM averaged 3.40 percent, down from 3.48 last week.

At this time last year, the 5-year and 1-year ARMS were at 4.35 and 4.53 percent respectively.

“Housing affordability increased for the second month in a row in August to tie April’s level, according to the National Association of Realtors,” said Nothaft. “As a result, pending existing home sales also rose for the second consecutive month in August to the strongest pace in four months, the NAR also reported. Furthermore, since the end of August, mortgage applications for home purchases were up over 14 percent for the week ended October 1st.”

The Mortgage Bankers Association reported Wednesday that mortgage applications to buy homes rose to its highest level since early May.

“The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent,” said Jay Brinkmann, MBA’s Chief Economist. “This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program.

“One possible driver of last week’s big increase in FHA applications was a desire by borrowers to get applications in before new FHA requirements took effect October 4th, which included somewhat higher credit score and down payment requirements.”

Read all about those FHA mortgage loan changes at ChicagolandRealEstateForum.com.

Categories: Economy, Mortgages

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