Growing consumer confidence and lower wholesale prices have propelled mortgage rates to historic lows, according to the latest data released by Freddie Mac.
The 30-year fixed-rate average sank to a record-low 3.34 percent, beating its previous all-time low of 3.36 percent set on Oct. 4. It marks the eighth consecutive week that the 30-year fixed rate has been below 3.5 percent. Last week, it averaged 3.4 percent. A year ago at this time, it was 4 percent.
The 15-year fixed-rate average also hit a new low, falling to 2.65 percent. Its previous all-time low was 2.66 percent set on Oct. 18. Last week, it averaged 2.69 percent. A year ago, it was 3.31 percent. The 15-year fixed rate also remained below the five-year adjustable-rate average for the second week in a row.
Hybrid adjustable-rate mortgages were mixed. The five-year ARM rose slightly to 2.74 percent, up from 2.73 percent last week. It was 2.97 percent a year ago. The one-year ARM was down to 2.55 percent from 2.59 percent a week ago. It was 2.98 percent a year ago.
“Fixed mortgage rates eased this week to record lows on indicators of higher consumer confidence and lower wholesale prices,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement. “Consumer sentiment rose in November to the highest reading since July 2007 according to the University of Michigan. Meanwhile, the core producer price index fell 0.2 percent in October.”
After five weeks of declines, mortgage applications were up last week, according to the Mortgage Bankers Association.
The Market Composite Index, a measure of loan application volume, increased 12.6 percent from last week. The Refinance Index soared 13 percent, while the Purchase Index surged 11 percent compared with the previous week.
“Following the decrease in applications two weeks ago due to the effects of superstorm Sandy, mortgage applications in many East Coast states rebounded strongly this week,” said Mike Fratantoni, MBA’s vice president of research and economics, in a statement.
The refinance share of mortgage activity accounted for 81 percent of total applications, up slightly from the previous week.