Mortgage Rates Back to the Four Percent Mark Amid Market Worries and European Financial Turmoil

Freddie Mac has released the results of its Primary Mortgage Market Survey (PMMS), showing average mortgage rates declining sharply to four percent for a 30-year fixed-rate mortgage (FRM) as investors rushed to U.S. Treasury bonds amid concerns over the European debt market. This marks the second lowest reading since FRMs hit a record 3.94 percent in the Oct. 6, 2011 PMMS, the lowest in history. The 30-year FRM averaged 0.7 point for the week ending Nov. 3, 2011, down from last week when it averaged 4.10 percent. Last year at this time, the 30-year FRM averaged 4.24 percent. The 15-year FRM 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 FRM averaged 3.63 percent. "Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates," said Frank Nothaft, vice president and chief economist for Freddie Mac. "Meanwhile, on the home front, the U.S. economy continued its gradual recovery. The Bureau of Economic Analysis reported the economy grew 2.5 percent in the third quarter, the strongest pace in a year, led by a surge in consumer expenditures. In addition, consumer spending rose 0.6 percent in September, nearly threefold that of August. Finally, consumer sentiment, as measured by the Thomson Reuters/University of Michigan index, rose for the second month in a row in October to its highest reading since July." 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 averaged 3.08 percent. A year ago, the five-year ARM averaged 3.39 percent. The one-year Treasury-indexed ARM averaged 2.88 percent this week with an average 0.6 point, down from last week when it averaged 2.90 percent. At this time last year, the one-year ARM averaged 3.26 percent.