30-year Mortgage Rate Down to 4%, Nears Record Low

Mortgage rates dropped again to 4 percent over the last seven days, flirting with the all-time record low reached on Oct. 6, according to Freddie Mac.
A major factor for the downturn in rates was a move by investors toward U.S. Treasury bonds as uncertainty prevails over the European debt market.
The 30-year fixed-rate mortgage averaged 4.00 percent, with an average 0.7 point, for the week ending today, down from last week when it averaged 4.10 percent. Last year at this time, the 30-year averaged 4.24 percent.
The all-time low for the 30-year fixed — 3.94 percent — was reached last month, Freddie Mac said.
All other terms for mortgage rates saw declines.
• The 15-year fixed averaged 3.31 percent, with an average 0.7 point, down from last week when it averaged 3.38 percent. A year ago at this time, the 15-year averaged 3.63 percent.
• The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent, with an average 0.6 point, down from last week when it averaged 3.08 percent. A year ago, the 5-year ARM averaged 3.39 percent.
• The 1-year Treasury-indexed ARM averaged 2.88 percent, with an average 0.6 point, down from last week when it averaged 2.90 percent. At this time last year, the 1-year ARM averaged 3.26 percent.
“Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates,” Frank Nothaft, vice president and chief economist, Freddie Mac. “Meanwhile, on the home front, the U.S. economy continued its gradual recovery.”
The Federal Reserve yesterday kept untouched its key federal funds rate at the historically low 0-.25 percent level, and said its position on rates probably wouldn’t change “at least through mid-2013.”
The target funds rate – the overnight borrowing rate banks charge each other – has been unchanged since December 2008. Banks set prime interest rates for their best loan customers using the funds rate as a benchmark. A higher funds rate would mean subsequent higher rates on credit cards, home equity lines and mortgages.

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