30 Year Fixed Mortgage Rate Fell Slightly According to Freddie Mac

Written By: admin on January 30, 2009 No Comment

Thursday, January 29, 2009. Mortgage rates fell slightly this week and remain near record lows, but it’s not clear if the cheaper financing will spark buying even as new home sales plunged to the lowest rate on record last month.

According to Freddie Mac’s weekly mortgage survey, interest rates on a 30-year fixed mortgage rate fell to 5.10% for the week ending Thursday, down from 5.12% the week before. Rates on a 15-year fixed mortgage were stagnant at 4.80% but still well below the 5.17% rate of a year ago.

Last week mortgage rates bounced off of record lows, ending a five-week stretch of tumbling rates. In fact, two weeks ago the 30-year mortgage rate plunged to 4.96%, the lowest level since Freddie Mac started collecting data in 1971.

“The key to bringing buyers back into the market will be if lower mortgage rates persist for an extended period of time. In the past when mortgage rates hit record lows it was a flash in the pan and rates rebounded really quickly,” said Greg McBride, senior financial analyst at Bankrate.com.

Freddie Mac’s survey results showed financing is cheapest in the West, as 30-year fixed rate mortgages in that region slumped to 5.03%, compared to 5.18% in the Northeast, which saw the most expensive financing.

The latest mortgage rate news was released on the same day that the Commerce Department said new home sales plummeted by a worse-than-expected 14.7% in December to a rate of 331,000 units — the lowest level on record. December’s hideous sales performance capped off the weakest year for new home sales since 1982.

On the other hand, the National Association of Realtors said on Monday existing home sales unexpectedly surged by 6.5% in December, the sharpest one-month jump since January 2002. That spike in exiting sales was accompanied with a 15.3% drop in prices from a year earlier.

“It’s not a quarter of a percentage point that’s keeping people on the sidelines right now. It’s the sense of the overall economy and the fact home prices are still falling,” said McBride. “Even in a lousy economy we could see an up tick in home sales in 2009 if these low mortgage rates persist throughout the year.”

The Federal Reserve has signaled a willingness to continue its aggressive actions to lower interest rates amid the year-long recession. At the conclusion of its two-day Federal Open Market Committee meeting on Wednesday, the Fed said it might up its buys of mortgage-backed securities and could start buying long-term Treasuries to keep interest rates low and entice buyers.

The central bank’s statement on buying mortgage-backed securities “shows a pretty clear indication that the Fed is willing to do whatever it takes to get rates low enough to bring home buyers back into the market,” said McBride.

Bankrate.com’s mortgage survey results showed rates for 30-year fixed mortgages fell to 5.48% this week, down from 5.59% last week. Rates for a 15-year fixed mortgage slid to 5.10%, down from 5.20% last week.

Three months ago the average 30-year fixed mortgage rate stood at 6.77%, meaning a $200,000 loan would have cost borrowers $1,299.86 per month, according to Bankrate.com. Now that rates have fallen sharply, that same loan would carry a payment of $1,133.07.

Freddie Mac also said the rates on five-year adjustable rate mortgages rose slightly to 5.27% from 5.24% the week before. Rates on a one-year adjustable rate mortgage fell to 4.90%, down from 4.92% the prior week.