Another Record Low for Mortgage Rates

The second week of September brought another record low in mortgage rates, though there really isn’t any enthusiasm on the part of buyers to take advantage. The average rate for a 30-year fixed rate mortgage dropped to 4.09%, its lowest level in 60 years according to Freddie Mac. The 15-year fixed mortgage rate dropped from 3.33% to 3.30%.

Contributing to these record low rates is the continuing concern on the part of investors about the state of European debt markets. This is increasing demand for U.S. Treasury bonds, keeping yields low and reducing mortgage rates. This hasn’t done much to help the ailing housing market though, as:

- mortgage applications only increased 6.3% in the week measured
- only 23% of mortgage applications were to buy a home, the remainder refinancing their current loans

Freddie Mac’s numbers indicate that 8 million homeowners have loans with Fannie Mae and Freddie Mac with carrying an interest rate of 6% or higher, and the average rate is at 5.28%. Using that average number, homeowners who can qualify could refinance a 30-year fixed loan on a $200,000 home and save around $1715/year.

With this the second rate decrease in two weeks, it would be difficult to predict a continuation of the trend, though one publisher of mortgage information believes that the Federal Reserve will “pull something out if its hat next week to make interest rates go down.” In August, the Fed promised to keep interest rates low until at least mid-2013.