Fixed-rate mortgage loan rates drop due to economic uncertainty
Aug 2011 04

Making lemonade out of lemons, the one good thin got come from the economic uncertainty hitting the financial markets this week is that mortgage loan rates have dropped. To record lows.

The average 30-year, fixed mortgage rate rose to 4.39%, according to the Freddie Mac weekly survey of loan providers.

The 30-year fixed-rate mortgage (FRM) averaged 4.39 percent with an average 0.8 point for the week ending August 4, down from 4.55 percent, last week. Last year at this time, the 30-year FRM averaged 4.49 percent, so rates are lower.

A $400,000, 30-year, fixed-rate mortgage at 4.39 percent would run you approximately $2,000 per month in loan repayments. This is down from $2,038, last week, $38 per month less, and $24 less per month compared to last year, when it would have cost you $2,024 per month.

Frank Nothaft, vice president and chief economist at Freddie Mac says, “Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and 5-year ARM setting new historical lows. The economy grew 1.3 percent in the second quarter, which was below the market consensus forecast, and first quarter growth was cut to less than a quarter of what was originally reported. In fact, the first half of this year was the worst six-month period since the economic recovery began in June 2009. Moreover, consumer spending fell 0.2 percent in June, representing the first decline since September 2009.

“On a positive note, there were indications that the housing market is firming. Real residential fixed investments added growth to the economy in the second quarter after subtracting from growth over the first three months of the year. The CoreLogic┬« National House Price Index rose for the third straight month in June (not seasonally adjusted) and was the first three-month gain since June 2010. Finally, pending existing home sales rose for a second consecutive month in June and was up nearly 20 percent from June 2010 when the housing tax credits expired.”

Are you thinking of buying a home this fall? Talk to your mortgage broker today to find out your options for locking in a low rate.

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