Mortgage Rates Hit Modern-Day Low
WASHINGTON (AP) _ Mortgage rates hit another low this week as the average interest rate on 30-year, fixed-rate mortgages dropped to 6.66 percent from 6.77 percent, Freddie Mac reported.
It was the lowest rate since the mortgage company started keeping records in 1971. Previously, the record low rate was 6.74 percent, in late October of 1993.
The drop in mortgage rates is one of the few benefits of recent international financial turmoil. Because of the relative strength of the U.S. economy, foreigners have been snapping up dollar-denominated assets, particularly government-guaranteed U.S. Treasury securities. Mortgage rates tend to move up and down with Treasury rates.
The drop has benefited home buyers, who have driven sales of both new and used homes to records highs this summer, and also many home owners who are refinancing their mortgages lower their monthly payments.
With this week’s record-breaking rate, another wave of refinancing may be on the way.
``Many homeowners with mortgages that were just recently considered too low to refinance now have the opportunity to move into even lower rate loans,″ Freddie Mac’s chief economist Robert Van Order said Thursday.
Reducing the rate on a 30-year, $100,000 mortgage by a half percentage point would save the borrower nearly $400 a year.
According to the Mortgage Bankers Association of America, mortgage loan applications last week were up 80.2 percent from the same time a year earlier. Refinancings represented 55.4 percent of last week’s total.
Meanwhile, Freddie Mac said 15-year mortgages, a popular option for refinancing, averaged 6.35 percent, a decrease from 6.43 percent the previous week and the lowest since October 1993.
On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.43 percent, down from 5.50 percent and the lowest since March of 1996.
The rates do not include add-on fees known as points.