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Today’s Mortgage Rate… Lower Than Yesterday’s

Here is an article I read on DSNews today. These new figures from Freddie Mac are stunning. With rates already at their lowest in over a half of a century, one has to wonder how low will they go? Here is the article:

How low can we go? When it comes to mortgage rates, the floor keeps dropping. Industry reports released Thursday show that interest rates for home loans – already at their lowest marks in more than a half-century – dropped again this week.

Market analysis conducted by Freddie Mac found that the 30-year fixed-rate mortgage (FRM) averaged 4.32 percent (0.8 point) for the week ending September 30, 2010. That’s down from 4.37 percent last week and tied with the all-time low in Freddie’s survey set four weeks ago.

The GSE reported that the 15-year FRM this week averaged a new record low of 3.75 percent (0.7 point). Last week, it came in at 3.82 percent.

The 5-year adjustable-rate mortgage (ARM) dropped to an average of 3.52 percent this week (0.6 point), according to Freddie Mac, also setting a new record low. The 1-year ARM rose slightly to 3.48 percent (0.7 point).

“Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week,” said Frank Nothaft, Freddie Mac’s VP and chief economist.

Weakening confidence in the economy’s trajectory was evident despite notable improvements in household balance sheets. Nothaft cited a Federal Reserve report, which shows that homeowners have regained $1.0 trillion in home equity as of the second quarter of 2010, after losing more than $7.5 trillion over the three-year period ending in the first quarter of 2009.

A separate weekly study by Bankrate also put mortgage interest rates at record-lows. Bankrates survey is based on data gathered from the top 10 banks and thrifts in the top 10 U.S. markets.

The tracking company reported that rates for conforming 30-year fixed mortgages remained unchanged this week at their 4.5 percent low (0.36 point).

The average 15-year fixed mortgage retreated to 3.94 percent (0.31 point), down from 3.96 percent last week, while the larger jumbo 30-year fixed rate inched lower to 5.16 percent.

Bankrate says adjustable rate mortgages hit new lows also, with the average 5-year ARM decreasing to 3.68 percent and the average 7-year ARM falling to 3.91 percent.

According to Bankrate, mortgage rates remain at record lows, not as a result of poor economic data, but rather in expectation of additional efforts by the Federal Reserve to revive the economy.

“Specifically, investors are counting on the Fed to resume quantitative easing – purchases of government bonds in an effort to drive market interest rates even lower,” the company said in its report. “Investors have been front-running the Fed by buying government debt now, bringing bond yields to ultra-low levels. Mortgage bond investors are pricing for the risk that loans could be refinanced if the Fed’s efforts reduce mortgage rates further.”