Economic worries continued to push mortgage rates lower this week, with rates on 30-year fixed loans falling to their lowest levels in more than two years, Freddie Mac reported today.
The average rate on 30-year fixed mortgages dropped 20 basis points in the last week, from 6.07 percent to 5.87 percent, and the average 15-year fixed was down 25 basis points during the period, from 5.68 percent to 5.43 percent. Points, or fees lenders charge for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.
Freddie Mac reported that average rates on adjustable-rate mortgages (ARMs) also declined, with the five-year Treasury-indexed hybrid ARM falling from 5.78 percent to 5.63 percent and the one-year ARM dropping from 5.47 percent to 5.37 percent. Points on these loans averaged 0.5 and 0.4, respectively.
“The latest employment report showed that the economy added 18,000 jobs in December, the smallest gain since August 2003, and the unemployment rate jumped to a two-year high of 5 percent,” Freddie Mac Vice President and Chief Economist Frank Nothaft said in a statement. “In addition, the Institute for Supply Management’s index of nonmanufacturing business activity showed that the service sector had the slowest expansion in nine months during December.”
Also contributing to the economic concerns was the National Association of Realtors’ latest pending home sales index, which signaled “a possible slowdown in December sales,” Nothaft said.
According to Bankrate.com’s mortgage-rate survey this week, “Mortgage rates have declined nearly one-half percentage point since Christmas as economic worries mount. This is the biggest two-week decline in mortgage rates since May 1995 (and) a disappointing employment report added fuel to mortgage rates’ decline. Worries about the economy typically prompt investors to park money in safe havens such as Treasury securities. … While the focus on weaker economic growth and a possible recession have pushed mortgage rates lower, several Fed speeches and inflation releases loom in the next week that could halt the decline.”
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