Mortgage Rates Drop Yet Again to New Lows

It’s a limbo contest in the world of mortgage rates, and each week they’re scooting under the bar. The limbo “dance” dates back to the 1950s, and interestingly enough, the last time rates for 30-year fixed mortgages were as low as they are now was in April 1951.

Thirty-year fixed-rate mortgages (FRMs) have been under 5 percent for 23 weeks in a row, according to data gathered by Freddie Mac. This week, the GSE reports that the average 30-year rate fell again to break the survey’s all-time low, hitting 4.19 percent (0.8 point). Last week, it was 4.27 percent.

The 15-year FRM this week averaged a record low of 3.62 percent (0.7 point) in Freddie’s study, down from last week’s 3.72 percent. The 5-year adjustable-rate mortgage (ARM) tied its all-time survey low set last week at 3.47 percent (0.6 point).

Frank Nothaft, VP and chief economist for Freddie Mac explained that long-term bond yields, and subsequently fixed mortgage rates, continued to ease this week because September’s lackluster employment report released Friday held no big surprises or shocks for the financial markets.

Nothaft also noted that historically, low rates have spurred mortgage refinancing waves. The Mortgage Bankers Association (MBA) reported Wednesday that applications for refinance jumped 24 percent last week to their strongest pace since April of 2009.

“The Bureau of Economic Analysis estimates that homeowners held an average effective mortgage rate of 6.07 percent in the second quarter of 2010,” Nothaft said. “By refinancing into this week’s 30-year fixed-rate mortgage, the average homeowner could save over $230 a month in principal and interest payments on a $200,000 loan balance.”

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