Mortgage Rates Hit Year’s 12th Record Low

Mortgage interest rates dropped to the lowest rate on record for a 12th time this year as a six-month case of the jitters continues to rattle the U.S. economy.
Rates on 30-year fixed mortgages have stair-stepped their way down by a full percentage point since April, according to Freddie Mac, which has tracked home loan rates for 39 years.

That’s equal to a $44,000 cut in interest costs on a $200,000 loan.

Observers say that the slide in rates began as investors sought the security of U.S. Treasury bonds, which influence mortgage rates.

“Mortgage rates have followed Treasury yields down,” Raymond James Chief Economist Scott Brown told Bloomberg. “I think the bottom line is they’ll stay low for quite some time.”

According to Freddie Mac, this week’s average rates were:

- Thirty-year fixed-rate mortgage: 4.19% with 0.8 of a point (or 0.8% of the loan amount) paid up front. That’s the lowest in records dating back to April 1971. The 30-year home loan rate — which averaged 8.9% for the past 39 years — peaked this year at 5.21% on April 10. It has fallen 1.02% since then, equal to a savings of $123 in monthly payments on a $200,000 loan and $44,132 in total interest over the life of the loan.

- Fifteen-year fixed-rate mortgage: 3.62% with 0.7 of a point, a low in records dating back to August 1991. The 15-year home loan has set 17 record lows this year, dropping 0.9% since April — equal to a savings of $90 off the monthly payment on a $200,000 loan and $16,281 in total interest.

- Five-year adjustable-rate mortgage (ARM): 3.47% with 0.6 of a point. That’s tied with last week’s low in records dating back to January 2005. The five-year ARM has fallen to a record low 17 times this year.

- One-year ARM: 3.43% with 0.8 of a point, up from last week when it averaged 3.40%. The low for the one-year ARM is 3.36% set in March 2004 in records dating back to 1984.

The Associated Press reported:

“Rates have fallen since spring as investors shifted money into the safety of Treasury bonds. That demand lowers their yields, which mortgage rates tend to track. The 30-year rate was 5.08 percent at the beginning of April (compared to 3.83% today) …

“Low rates haven’t helped the struggling housing market, which recorded its worst summer in more than a decade. But they have led to a surge in refinancing.

“And rates could fall even further in the coming week.

“The Federal Reserve is leaning toward buying more Treasury bonds to drive down loan rates and boost the economy, according to minutes of closed-door deliberations released Tuesday. Economists predict Fed officials will approve a bond purchase program at their Nov. 2-3 meeting.”

Information Provided By: The Orange County Register