Freddie Mac has released the results of its Primary Mortgage Market Survey (PMMS), showing the average rate for the conventional 30-year fixed mortgage dropping below the four percent for the first time in history amid increasing global economic concerns. This week, the 30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending Oct. 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.
Also this week, the 15-year FRM averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. Last year at this time, the 15-year FRM averaged 3.72 percent.
Despite the low rates, however, buyers remain unmotivated to purchase homes. According to the Mortgage Bankers Association (MBA), mortgage applications dropped 4.3 percent over the past week, despite rates dropping below the four percent mark.
"Average 30-year conventional fixed mortgage rates fell below four percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew," said Frank Nothaft, VP and chief economist for Freddie Mac. "Average 15-year fixed rates fell to a record low in the PMMS as well. Interest rates for one-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs. Also, in his testimony to Congress's Joint Economic Committee on Tuesday, Federal Reserve Chairman Bernanke said the recovery is close to 'faltering' and stressed the need for lawmakers to act."
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it also averaged 3.02 percent. A year ago, the 5-year ARM averaged 3.47 percent. The one-year Treasury-indexed ARM averaged 2.95 percent this week with an average 0.5 point, up from last week when it averaged 2.83 percent. At this time last year, the one-year ARM averaged 3.40 percent.
"Most homeowners are still staring at too high of a loan to value amount which is keeping them from qualifying for a refinance," said Eric Tishaw, chief operating officer of Hometown Lenders and author of the Net Branch Survival Kit. "The industry desperately needs a product that can safely address this challenge."
