Mortgage rates in the U.S. fell to a
record for a third straight week, reducing borrowing costs as
the housing market improves and home-loan defaults decline.

The average rate for a 30-year fixed loan dropped to 3.79
percent in the week ended today from 3.83 percent, Freddie Mac
said in a statement. It was the lowest in the McLean, Virginia-
based mortgage-finance company’s data dating to 1971. The
average 15-year rate decreased to 3.04 percent, also a record,
from 3.05 percent.

Record-low mortgage rates, combined with job gains and
lower-priced homes, are helping to lift housing demand and
stabilize the real estate market. Housing affordability reached
a new high in the first quarter and sales of previously owned
homes rose 5.3 percent from a year earlier, data from the
National Association of Realtors show. The share of home loans
at least 30 days late dropped to 7.4 percent, the lowest since
2008, the Mortgage Bankers Association said yesterday.

Low borrowing costs are encouraging homeowners to reduce
their monthly bills. The mortgage bankers’ measure of
refinancing applications jumped 13 percent in the week ended May
11, the mortgage-banking group said yesterday. The gauge of
purchases declined 2.4 percent.

Builders began work on more homes than analysts estimated
in April, a sign the real estate market is stabilizing. Housing
starts climbed 2.6 percent from the previous month to an annual
pace of 717,000, Commerce Department data showed yesterday.

To contact the reporter on this story:
Christine Maurus in New York at
cmaurus@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

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Buying a home just got even cheaper as interest rates on both 30-year and 15-year-fixed-rate mortgages set record lows for the third week in a row.

The 30-year fixed mortgage, the most popular mortgage product, dipped by 0.04 percentage points to 3.79%, according to a weekly survey by Freddie Mac. Last year, 30-year loans averaged 4.64%. The new low can save borrowers $50 a month for every $100,000 borrowed. Over a 30-year term, that comes to $21,874.

The 15-year fixed mortgage, which is popular among those looking to refinance, inched down 0.01 percentage points to 3.04%, according to Freddie Mac’s survey. That’s down from 3.82% a year ago. The new 15-year rate would lower borrowing costs to $693 a month for every $100,000 borrowed, a $38 savings compared to last year.

Ongoing economic turmoil in Europe is, in part, responsible for the continued slide in mortgage rates, according to Freddie Mac’s chief economist, Frank Nothaft.

“The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” he said.

As for economic conditions here in the U.S., Nothaft pointed to recent reports that showed improvements in industrial production, consumer sentiment and new home construction.

Affordable mortgages, combined with much lower home prices, should also help to bolster the housing market.

6 ways to get a great mortgage deal

Rates are almost half what they were at the peak of the housing bubble in mid-2006. At the time, the median price of a U.S. home was about $250,000, according to the National Association of Home Builders, and the average interest rate was about 6.75% for a 30-year loan.

A person who bought a home in 2006 with 20% down would have made payments of $1,300 a month. Today, a person who buys a median priced of home of about $162,000, would pay less than half that amount, about $600 a month.

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By Martin Wolk

Mortgage rates have continued to fall over the past week, setting record lows for both 30-year and 15-year contracts, mortgage giant Freddie Mac said Thursday.

The 30-year benchmark now stands at 3.79 percent, down from 3.83 percent a week ago, with an average “point” fee of 0.7 percent of the mortgage value. The 15-year fixed rate average fell to 3.04 from 3.05 percent.

“The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” Freddie Mac chief economist Frank Nothaft said in a statement.

There is some evidence that a low rates combined with a gradually growing U.S. economy are injecting some life into the housing industry. 

Housing starts rose to an annualized rate of 717,000 homes in April, well above the market consensus forecast, and construction on one-family homes increased to its strongest pace in three months, Nothaft noted. Homebuilder confidence also rose to its highest reading since January 2008 according to an industry survey.

Rates on adjustable mortgages edged up in the past week but are still historically low at an average 2.83 percent for a five-year ARM.

 

NEW YORK, May 16, 2012 /PRNewswire/ – Mortgage rates fell for the seventh time in the past eight weeks and set a new record for the fourth consecutive week. The average rate on the benchmark 30-year fixed mortgage rate dropped below the 4 percent mark for the first time ever, down to 3.97 percent, according to Bankrate.com’s (RATE) weekly national survey. The average 30-year fixed mortgage has an average of 0.44 discount and origination points.

(Logo: http://photos.prnewswire.com/prnh/20040122/FLTHLOGO )

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/

The average 15-year fixed mortgage rate held at 3.2 percent while the jumbo 30-year fixed mortgage sank to another record low of 4.52 percent. Adjustable mortgage rates were mixed, with the average 1-year adjustable slipping to 3.11 percent, while the popular 5-year ARM ticked higher to 3 percent.

The ongoing European debt crisis is producing another flight to quality, where investors gravitate to safe-haven investments such as U.S. Treasuries. Mortgage rates, which are closely related to yields on U.S. Treasuries, have been direct beneficiaries, falling to new lows. As long as uncertainty prevails, mortgage rates are likely to remain at these ultra-low levels.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 3.97 percent, the monthly payment for the same size loan would be $951.37, a difference of $290 per month for anyone refinancing now.

SURVEY RESULTS

30-year fixed: 3.97% — down from 4.02% last week (avg. points: 0.44)

15-year fixed: 3.20% — unchanged from last week (avg. points: 0.40)

5/1 ARM: 3.00% — up from 2.99% last week (avg. points: 0.33)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. The majority of the panelists, 58 percent, see little change in mortgage rates over the next seven days. The remainder are evenly split, with 21 percent predicting an increase in mortgage rates and an equal 21 percent forecasting a decrease in the coming week.

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI

About Bankrate, Inc.
Bankrate is a leading publisher, aggregator, and distributor of personal finance content on the Internet. Bankrate provides consumers with proprietary, fully researched, comprehensive, independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes. The Bankrate network includes Bankrate.com, our flagship website, and other owned and operated personal finance websites, including CreditCards.com, Interest.com, Bankaholic.com, Mortgage-calc.com, CreditCardGuide.com, Nationwide Card Services, InsuranceQuotes.com, CarInsuranceQuotes.com, InsureMe, Bankrate.com.cn, CreditCards.ca, NetQuote.com, and CD.com. Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of nearly 600 local markets in all 50 U.S. states, Bankrate generates over 172,000 distinct rate tables capturing on average over three million pieces of information daily. Bankrate develops and provides web services to over 80 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, AOL, CNBC, and Bloomberg. In addition, Bankrate licenses editorial content to over 500 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times, and The Boston Globe.

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