30-Year Mortgage Drops To New Record Low

Here’s some news to brighten the day of would-be home buyers:  mortgage rates are dropping again, reaching record lows.  The average rate on a 30 year loan is now at 3.56 percent, down .1 percent since last week.  This is the lowest rate the housing market has seen for long-term mortgages since the 1950s.  At this time last year, the rate was 4.51 percent.
15 year mortgages are also down slightly, now coming in at 2.86 percent, beating last week’s record of 2.89 percent.
Home sales have increased since this time last year, due in part to cheaper mortgages.  Home builders have begun to ramp up their activity, and home prices are seeing gains in most places.
Those looking to refinance will be helped by these lower mortgage rates, which in turn helps the economy.  When homeowners spend less on interest, they have more money to spend on other things, including home improvements, new appliances, and new furniture.
With all this good news, the rate of home sales is still slow.  Many buyers don’t qualify for home loans, or simply can’t afford the large down payments.  The dragging job market is also having an effect on home sales, as some buyers are putting off purchasing a home this year.
Only 80,000 jobs were added in June by employers in the US.  This follows a trend of low rates of hiring over the past three months.  The unemployment rate is holding steady at 8.2 percent.  The slow rate of job creation has had a definite impact on consumer spending, as people are tightening their belts to weather this economic downturn.
10 year Treasury notes are helping the mortgage rates drop, as they generally track their yield.  Investors are buying up more Treasury securities as they are seen as safe investments during this time of a weak US economy and the debt crisis in Europe.  As investors create demand for these securities, the yield decreases.
Average rates are calculated Monday through Wednesday of each week across the nation, and this rate does not include the extra fees, or points, that would-be buyers need to pay in order to ensure they receive the lowest possible rates.  In these calculations, one point is equal to one percent of the amount of the loan.
Average fees for loans are also down.  30 year loans saw a decrease of 0.7 point, which is down from last week’s 0.8 point.  15 year loans saw no change from week to week, coming in at 0.7 point.
Adjustable rate mortgages also saw movement over the last week.  One year adjustable rate mortgages increased slightly from 2.68 percent last week to 2.69 this week.  The fee for these loans was down a bit, dropping from 0.5 point last week to 0.4 point this week.  Rates on a five year adjustable mortgage decreased from 2.79 percent last week to 2.74 percent this week.  The fee for a five year adjustable mortgage remained steady at 0.6 point.