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Interest rates fall back to record low

These leaders have been a driving force behind the nation's economic policies since the financial crisis of 2008.

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Saturday, October 2, 2010

The average interest rate for 30-year fixed loans fell to 4.32 percent this week, the lowest on record dating from 1971, Freddie Mac reported on Thursday. That's down from 4.37 percent the previous week and ties the average rate reached four weeks ago.

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The average rate on 15-year fixed loans fell to 3.75 percent, the lowest on records dating back to 1991.

Rates on five-year adjustable-rate mortgages averaged 3.52 percent, down from 3.54 percent last week. Rates on one-year adjustable-rate mortgages rose to an average of 3.48 percent from 3.46 percent, according to Freddie Mac.

Rates have been at or near the lowest levels in decades since spring as investors poured money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields. In recent weeks, Treasury yields have dipped as bond traders bet that the Federal Reserve will soon boost its Treasury purchases in the hope of giving the economy a lift. That has pushed down rates.

Still, historically low rates have done little to boost the struggling housing market, which had its worst summer in more than a decade. Fall sales are not expected to be much better.

"There's a problem with confidence because the unemployment rate remains very high," said Donald Rissmiller, chief economist at Strategas Research Partners in New York. "We have a housing market struggling to stay flat at very depressed levels."

The rates do not include add-on fees known as points. One point is equal to 1 percent of the loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.8 a point for 30-year mortgages. It averaged 0.7 of a point for 15-year and 1-year mortgages and 0.6 of a point for 5-year mortgages.

The Mortgage Bankers Association's loan application index fell 0.8 percent in the week ended Sept. 24 to the lowest level in almost two months. Purchase applications increased 2.4 percent, while refinancing declined 1.6 percent, the MBA said Wednesday.

-- From news services


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