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Real Estate Notes

Average 30-year mortgage rates drop to 4.78 percent

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Saturday, May 29, 2010

The average rate on a 30-year fixed rate mortgage dipped to 4.78 percent this week from 4.84 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the lowest since early December, when rates fell to a record low of 4.71 percent.

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The average rate on a 15-year fixed-rate mortgage fell this week to 4.21 percent-- the lowest level in nearly two decades.

Rates on five-year, adjustable-rate mortgages averaged 3.97 percent, up from 3.91 percent. Rates on one-year, adjustable-rate mortgages fell from 4 percent to 3.95 percent, the lowest since May 2004.

Concerns about rising government deficits and debt in Greece, Portugal and Spain have devalued the euro and sent stock markets tumbling around the world. Investors seeking the safety of U.S. bonds, including mortgage-backed securities, are driving down home loan rates, said David Berson, chief economist for PMI Group Inc. in Walnut Creek, Calif.

"The more concern there is about Europe, the lower interest rates will go," Berson, a former chief economist at Fannie Mae, said in an interview before the Freddie Mac report. The 30-year rate may fall to a record low in coming weeks, he said.

Other analysts say the opportunity may not last. If Europe's woes subside and the U.S. economic recovery stays on track, rates are likely to move higher. "Strike now," said Greg McBride, senior financial analyst at Bankrate.com.

-- From News Services


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