Freddie Mac’s Primary Mortgage Market Survey for last week, released this morning, showed that rates for most types of mortgages are still sitting at sixty year lows.
The average contract rate for a 30-year fixed rate mortgage was unchanged at 4.09%. The rate on a 15-year fixed rate mortgage fell one basis point to 3.29%. The rate on a 5/1 ARM rose slightly from 2.99% to 3.02%, while the rate on a 1-year ARM increased from 2.81% to 2.82%.
Over the past few weeks, the fear of a Greek default (and the exposure that European mega-banks have to Greece) has rattled global stock markets. At the same time, the full scope of the exposure of U.S. banks to mortgage and foreclosure fraud is becoming increasingly clear as ratings agency Moody’s downgraded Bank of America, Citigroup, and Wells Fargo yesterday (which some may say is a few years too late).
Yesterday the Federal Reserve released its most recent FOMC statement which was decidedly pessimistic, saying that “there are significant downside risks to the economic outlook, including strains in global financial markets”.
Additionally, the Fed said that they would switch some of their holdings from short duration Treasuries to longer duration Treasuries and would reinvest principal payments from agency debt and agency mortgage-backed securities into agency mortgage-backed securities. None of this served to assuage stock markets, which fell yesterday and are still falling today.
Investors are increasingly seeking shelter in U.S. Treasury bonds and mortgage backed securities. The yield on 10-year Treasuries is currently hovering around 1.77, a record low, and mortgage rates will likely break record lows again today.
Financial markets can shift rapidly, but I would not be at all surprised if we see mortgage rates hit new all-time lows next week.
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