Mortgage rates reach record lows — again
Mortgage rates in the U.S. tumbled to record lows for the second week in a row. Freddie Mac says the new lows are the result of the economy growing at a much slower pace than many anticipated.
Nearly all rates record low
According to Freddie Mac’s weekly Primary Mortgage Market Survey, 30-year fixed rate mortgages averaged 3.87 percent for the week ending Thursday, Feb.2. That is a drop from last week’s 3.98 percent, and a major fall from 2011’s 4.81 percent. Meanwhile, the 15-year fixed rate mortgage averaged 3.14 percent, dropping from 3.24 percent last week and 4.08 percent a year ago.
Both current rates are the lowest recorded since Freddie Mac began keeping records in 1970.
Freddie Mac cites slow growth of GDP
Frank Nothaft, vice president and chief economist of Freddie Mac, said in a press release:
“Most mortgage rates eased to all-time record lows this week as fourth quarter growth in the economy fell short of market projections.”
The nation’s GDP grew by 2.8 percent in last year’s final quarter, Nothaft elaborated; that is below the expectations of economists.
But there was some improvement, Nothaft continued:
“One bright spot, however, was that fixed residential investment increased for the third consecutive quarter and residential construction spending rebounded in December, rising 0.7 percent.”
There was also growth seen in the one-year Treasury-indexed adjustable-rate mortgage. It averaged 2.76 percent, up from 2.74 percent last week. However, it averaged 3.26 percent last year.
Separate study concurs
A separate mortgage survey by Bankrate.com also recorded record low mortgage rates for the week. The company, in a press release, blamed the Federal Reserve and Ben Bernanke for the dip.
Bankrate.com said in a press release:
“The pledge to keep short-term interest rates on hold until late 2014 was the catalyst for this week’s move and will also help keep a lid on mortgage rates for the foreseeable future.”
Late last month, the Federal Reserve, citing a down-turning global economy and a sluggish domestic labor market, announced that it expects to keep interest rates at record lows until late 2014.
Bankrate.com’s press release also called the low rates “fortuitously timed” in the light of the Obama administration’s newest refinancing program.
During a visit to a Northern Virginia community center Wednesday, President Obama outlined a program whereby homeowners with privately held mortgages can have a chance at refinancing into loans backed by the Federal Housing Administration. The homeowners would then be able to take advantage of the record low interest rates. The plan has not yet been approved by Congress.