You don’t have to be in the market for a house to know that mortgage rates are as low as they’ve ever been. You might even have heard that this past week, ending July 13, mortgage rates fell yet again.
What you might not be aware of, though, is that this week’s decline is the 11th time in the past 12 weeks that 30-year mortgage rates have fallen. Even more astonishing? It was the 16th straight week that the 30-year FRM was below 4 percent.
According to Freddie Mac’s most recent report in their weekly Primary Mortgage Market Survey, a 30-year fixed-rate mortgage, also called an FRM, averaged 3.56 percent. This is down 0.06 points from a week ago and almost a full point below the 4.51 perent average from this time a year ago.
Furthermore, the 15-year fixed loan rate for this week also broke a record, again from the week previous, falling to 2.86 percent from 2.89 percent. The 15-year FRM averaged 3.65 percent last year at this time.
Moreover, on 5-year hybrid adjustable-rate mortgages (ARMs), the average rate was 2.74 this week, down from 2.79 last week and 3.29 percent a year ago. Treasury-indexed 1-year ARMs, however, rose from 2.68 to 2.69 percent; a year ago, this rate was at 2.95 percent.
According to Freddie Mac, in order to procure the low rates on FRMs, a borrower would have had to pay 0.7 percent of the balance to a lender; on ARMs, it was 0.06 percent for 5-year rates and 0.04 percent for the 1-year loan. A not uncommon practice, paying additional discounts upfront usually lowers mortgage rates even more. Diligent borrowers not only can discover that paying upfront discounts lowers their long-term rate, but they can also find rates even lower than the reported average.
Freddie Mac, a Virginia mortgage finance company established by Congress in 1970 and supported by American taxpayers, bases its survey on what rates that lenders have offered to hopeful buyers with a solid credit rating and at least 20 percent of the sale price as a down payment. Also included in the survey are those borrowers hoping to refinance, in which case the minimums are solid credit and 20 percent equity in their home.
The continued record low rates follow an insipid employment report for June, as only 80,000 net new jobs were added, causing the unemployment rate to remain steady at 8.2 percent. Furthermore, yields on 10-year Treasury notes also decreased (often a barometer for FRMs), and economic recovery remains static. Combined, these three contributed to yet another drop in interest rates to the new record-low level.
All of this also caused concern for some members of the Federal Reserve monetary policy board. In their most recent policy meeting, in mid-June, some board members expressed a belief that more financial stimulus was needed to keep the economy from further deteriorating.
On the heels of all this news, stock market prices fell 1 percent toward the end of the week, and the latest yield on the 10-year Treasury bond fell even lower, too, which will almost certainly result in further record-low mortgage rates next week.