Mortgage giant Freddie Mac reports that mortgage rates set new record lows this week, as concerns over the European debt crisis and a weak U.S. employment report for August sent investors fleeing to the relative safety of Treasuries and mortgage-backed securities that fund most home loans.
But a separate survey by the Mortgage Bankers Association showed demand for purchase loans remaining "at extremely low levels" last week, close to lows last seen in 1996.
Rates on 30-year fixed-rate mortgages averaged 4.12 percent with an average 0.7 point for the week ending Sept. 8 — a new low in records dating to 1971, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. That’s down from 4.22 percent last week and a 2011 high of 5.05 percent in February.
Rates on 15-year fixed-rate mortgages averaged 3.33 percent with an average 0.6 point, down from 3.39 percent last week and a 2011 high of 4.29 percent seen in February. That’s a new low in records dating to 1991.
For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.96 percent with an average 0.6 point, unchanged from last week’s record low of 2.96 percent. That’s down from 3.56 percent at the same time last year and a 2011 high of 3.92 percent in February.
The 1-year Treasury-indexed ARM loan averaged 2.84 percent with an average 0.6 point, down from 2.89 percent last week and a 2011 high of 3.4 percent seen in February.
"Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields and allowed fixed mortgage rates to hit new lows this week," said Freddie Mac chief economist Frank Nothaft in a statement.
"On net, the economy added no new jobs last month and was the weakest reading since September 2010. Meanwhile, the unemployment rate remained at 9.1 percent, marking its 31st consecutive month of being above 8 percent, the longest such stretch in 70 years."
Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans was virtually unchanged last week compared to the week before, and down 13.5 percent from the same week a year ago.
Requests for refinancings were down 6.3 percent from the week before, and were down more than 35 percent from a year ago, the MBA said in releasing the results of its Weekly Mortgage Applications Survey.
Refinancing requests nevertheless accounted for 77.1 percent of all mortgage applications. Requests for ARM loans accounted for 7.1 percent of applications.
In an Aug. 19 forecast, MBA economists predicted rates on 30-year fixed-rate mortgages will rise to an average of 4.6 percent during the final three months of this year, and continue a gradual rise next year to an average of 5.2 percent during the fourth quarter of 2012.