Mortgage Rates Drop

Published by: Dave Simmons on 14th Jul 2011 | View all blogs by Dave Simmons
Mortgage Rates Drop

Mortgage giant Freddie Mac reported Thursday that mortgages rates fell this week, with the 15-year fixed-rate loan averaging its lowest rate for the year.  The average rate for a 30-year, fixed rate mortgage fell from 4.60 percent a week ago to 4.51 percent, just above its lowest level of the year, set a month ago at 4.49 percent.  The average for a 15 year fixed rate, fell from 3.75 percent to 3.65 percent.

Rates typically track the yield on a 10 Treasury note, which fell sharply last week after dismal job market reports sent investors flocking to the relative safety of government bonds.  Yields of the bonds fall as their prices rise.  Low mortgage rates and rock-bottom home prices have done very little to spark a sustained recovery in the nation's long struggling housing market.  Many Americans are hesitant to buy homes because of uncertainty in the job market, and others simply can't qualify because of tighter standards imposed by lenders.  Still others are holding off because they fear further price drops.

To calculate mortgage rates, Freddie Mac collects rates from lenders across the country from Monday through Wednesday in a given week.  Rates often fluctuate significantly, even within a single day.  The average rate for a five year adjustable rate mortgage, or ARM, this week dropped from 3.30 percent to 3.29 percent.  Tho weeks ago, the 5 year ARM hit its lowest level on records dating back to 2005 at 3.25 percent.  The average rate for a one year ARM, meanwhile, reached a record low of 2.95 percent, from 3.01 percent a week ago.

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