Mortgage rates have plummeted to historic lows, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average fell to 3.4 percent, down from 3.49 percent a week ago. Last year at this time, it was 4.01 percent. It is just the third time since the data began to be tracked in 1971 that the 30-year fixed rate has been below 3.5 percent. It has remained below 4 percent for all but one week this year.
The 15-year fixed-rate average also declined, falling to record-low 2.73 percent. It was 2.77 percent a week ago and 3.28 percent a year ago. The 15-year fixed rate has remained below 3 percent since the end of May.
Hybrid adjustable-rate mortgages were down, too. The five-year ARM dropped to 2.71 percent from 2.76 percent a week ago and 3.02 percent a year ago.
The one-year ARM edged down slightly to 2.60 percent from 2.61 percent a week ago and 2.83 percent a year ago.
Frank Nothaft, Freddie Mac vice president and chief economist, pointed to the Federal Reserve’s stimulus program as the reason for the rates decline.
“Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market,” Nothaft said in a statement.
“The Standard & Poor’s/Case-Shiller 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010. Moreover, 16 of the cities saw positive growth, led by Phoenix’s 16.6 percent gain. Additionally, new home sales in July and August had the strongest two-month pace since March and April 2010.”
Meanwhile, mortgage applications were up from the previous week, according to the Mortgage Bankers Association.
The Market Composite Index, a measure of mortgage loan application volume, rose 2.8 percent from a week ago. The Refinance Index increased 3 percent from the prior week, while the Purchase Index went up 1 percent from last week.
The refinance share of mortgage activity is now 81.2 percent of total applications, the highest it has been since early August, shortly after the 30-year fixed-rate average fell below 3.5 percent for the first time.
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