Weighed down by sliding 10-year bond yields, average fixed mortgage rates hit new lows for the year this week, with the 30-year fixed rate at 3.97 percent.
That’s the lowest level rate since the week of June 20, 2013 when it averaged 3.93 percent, according to Freddie Mac.
That was also the last time the 30-year fixed averaged below 4 percent, based on Freddie Mac’s mortgage market survey.
U.S. government bond yields, which is a big driver of mortgage rates, plunged on Wednesday as traders re-evaluated growth outlooks for Europe. The benchmark 10-year Treasury dipped as low as 1.873 percent on Wednesday before regaining ground as investors sought safe haven with the U.S.
Lower borrowing costs could help give a needed boost to the housing recovery, which has been slowed by tight inventories, higher prices and a dried-up refinancing market since rates began to rise last year. However, much hinges on how long rates stay at this level and how many qualified homeowners are in the market following the refinancing boom of 2010-2013.
“Mortgage rates were down sharply following the decline in the 10-year Treasury yield for the second straight week,” Frank Nothaft, vice president and chief economist, Freddie Mac. “Rates are at their lowest levels since June 2013 amidst continued investor skepticism regarding the precarious economic situation in Europe.”
Here is Freddie Mac’s rundown for the week: