Since the beginning of the year, mortgage rates have been extremely affordable for consumers, and that trend continued last week, when they fell to another all-time low.
The average rate for fixed 15-year mortgages slipped to 2.69 percent for the week ending October 4, marking the second consecutive period in which these figures were at the lowest points ever observed, according to the latest Primary Mortgage Market Survey from Freddie Mac. That was down from 2.73 percent the previous week, and 3.26 percent in the same period in 2011.
Meanwhile, the average rate for 30-year FRMs fell to just 3.36 percent last week, down from the 3.4 percent seven days earlier, the report said. That, too, was a considerable drop from the figure seen during the same week last year.
“Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy,” said Frank Nothaft, vice president and chief economist for Freddie Mac. “In addition, personal incomes rose only 0.1 percent in August, while July’s increase was revised downward. And finally, pending home sales in August fell 2.6 percent, well below the market consensus forecast of a slight increase.”
Nothaft also noted that this change came despite the fact that growth of the gross domestic product was revised down to just 1.3 percent in the second quarter of the year, the report said. That’s the slowest period of growth in a year.
Meanwhile, adjustable-rate mortgages were more of a mixed bag than FRMs, the report said. For instance, five-year Treasury-indexed hybrid adjustable-rate mortgages averaged just 2.72 percent last week, but that was up from 2.71 percent. Still, it was down from the previous year’s 2.96 percent.
At the same time, however, one-year Treasury-indexed hybrid ARMs saw rates fall, though only slightly, the report said. Last week, they averaged 2.57 percent, down from 2.6 percent the week prior. A year before, they came in at 2.95 percent.
Low mortgage rates, encouraged by QE3, could encourage more would-be buyers to enter the home shopping process, as well as push more current owners to refinance their existing loans so that their monthly payments are more affordable. These factors, in addition to growing home prices, would be huge positives for the housing market in general.