30-year mortgage rate drops to 4.71% in latest national survey
May 2011 05

The average 30-year, fixed mortgage rate improved during the past week, down from 4.71% on a national basis to 4.78%, according to the Freddie Mac weekly survey of loan providers.

The 30-year fixed-rate mortgage (FRM) averaged 4.71 percent with an average 0.7 point for the week ending May 5, 2011, down from last week when it averaged 4.78 percent. Last year at this time, the 30-year FRM averaged 5.00 percent, so continued good news for buyers, rates are off by more than a quarter percentage point.

A $400,000, 30-year, fixed-rate mortgage at 4.71 percent would run you approximately $2,077 per month in loan repayments. This is $17 less per month when compared to last week and $70 in monthly savings compared to last year(!).

This week, 15-year fixed rate mortgages averaged 3.89 percent with an average 0.7 point, up from last week when it averaged 3.97 percent. A year ago at this time, the 15-year FRM averaged 4.36 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac says, “Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week. For instance, real economic growth in the first quarter fell short of the market consensus forecast and represented the slowest pace since the second quarter of 2010. In addition, both the manufacturing and service sectors exhibited growth at a slower rate in April.

“Data reports on the housing market, on the other hand, were a little more uplifting. The National Association of Realtors┬« reported pending home sales rose in March for the second month in a row to the highest index reading since November 2010. Also, the Federal Reserve reported credit standards among commercial banks for prime mortgages were unchanged on net in the second quarter of the year, following two quarters of tightening.”

So, a weaker economy than first estimated led to lower mortgage loan rates. I suspect we’re going to see an improved economy during the next several months; mortgage rates could go higher.

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