"That's a low price! On Mortgages".
Government backed mortgage securities hit record high prices yesterday. As a result, yields dropped to record low points, causing mortgage rates to drop to the lowest levels on record. According to Freddie Mac, the average mortgage rate on a 30 year fixed rate mortgage fell to 4.69 percent yesterday, down from 4.75 percent last week.
This is the lowest rate since Freddie Mac began keeping track in 1971! The previous all-time low was hit in December 2009.
Mortgage rates have dropped for a variety of reasons. The debt crisis in Europe and stock market volatility has driven many risk averse investors into the bond market, causing bond prices to surge and yields to drop.
Despite the record low rates, refinancing has decreased steadily over the past several months. Many people who are able to refinance have already done so, and those that have not refinanced likely cannot refinance due to credit issues or because they are underwater on their mortgages. According to Zillow, 23 percent of American homeowners owe more on their mortgage than their home is worth. Additionally credit is tighter and underwriting standards have increased as a result of the subprime crisis.
Yesterday the Federal Reserve affirmed its commitment to keep interest rates low for an “extended period”, saying that economic conditions do not currently warrant a rate hike. I am sure that mortgage rates will eventually trend back up, but nothing indicates that will happen in the near future.
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Karen Rivedal
June 25, 2010 @ 10:22 am
Love this blog and its timely, informative entries on everything mortgage-related. As a first-time blogger on real estate matters for the Wisconsin State Journal, I’ve linked to several entries from this blog for recent postings. You can visit my blog, Property Trax, and view my latest entry about the record-low rates referencing this blog among other sources at http://host.madison.com/wsj/business/real-estate/article_ab668e2c-8072-11df-8ad6-001cc4c002e0.html.
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