Mortgage Rates Hit New Record Lows
Interest rates on long-term U.S. mortgage loan dropped again in the latest week, with some finding new all-time lows, according to mortgage finance company Freddie Mac.
During the week ended April 25, 2013, the average rate on a 30-year fixed rate mortgage (FRM) fell to 3.40 percent, excluding fees, down from 3.41 percent the week before and down from 3.88 percent at this time last year. This is the fourth consecutive week of falling rates and the 30-year FRM rate is now back to lows not seen since January of this year.
The 15-year FRM sank to a new record low this week, falling to an average rate of 2.61 percent, down from 2.60 percent the previous week and 2.85 percent the year before. Prior to this week, the record low was 2.63 percent roughly five months ago during the third week of November 2012.
The one-year adjustable rate mortgage (ARM) declined from 2.62 percent, just off from 2.63 percent last week.One year ago, the average rate was 2.74 percent.
Freddie Mac offered little explanation for the continued drop in rates, emphasizing instead the benefits of low rates.
“The housing market is getting a boost with mortgage rates hovering at or near record lows,” said Freddie Mac Vice President and chief economist Frank Nothaft in a statement. “ For instance, existing home sales averaged an annualized pace of 4.94 million over the first three months of this year, the most since the fourth quarter of 2009. More impressively, new home sales topped 424,000 during the first quarter, which was the strongest since the third quarter of 2008. The sales pickup is helping to support house-price gains. For instance, the Federal Housing Finance Agency reported that February marked the thirteenth consecutive month that it has recorded an annual rise in its U.S. house price index, which rose by 7.1 percent in the twelve months through February, the most since May 2006. Even with these gains, this U.S. index is still 13.6 percent below its peak set in April 2007.”
Interest rates are being kept low by the Federal Reserve in order to boost the economy and absent a major change in inflation, the Fed has promised to continue its rate policy for en extended period of time.
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