Mortgage rates plunged into uncharted territory this week as fears that the U.S. and Europe might be headed for another recession had investors moving funds out of stock markets and into the relative safety of government-backed bonds and securities that fund most mortgage lending.
Freddie Mac’s latest Primary Mortgage Market Survey showed rates on both fixed- and adjustable-rate mortgages continuing a three-week slide to hit new record lows. Rates on loans tracked by Freddie Mac are now nearly a full percentage point below 2011 highs seen in February.
A separate survey by the Mortgage Bankers Association suggests that low rates aren’t generating a rush for home loans. Many homeowners who are eligible to refinance already have. Applications for purchase loans actually fell last week, as doubts about the economy made prospective homebuyers more hesitant to close a deal.
Rates on 30-year fixed-rate mortgages averaged 4.15 percent with an average 0.7 point for the week ending Aug. 18, down from 4.32 percent last week and a 2011 high of 5.05 percent in February, Freddie Mac said.
That’s a new all-time low for 30-year fixed-rate loans in Freddie Mac records dating to 1971, surpassing the previous record of 4.17 percent set during the week ending Nov. 11, 2010.