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Tuesday, October 4, 2011
30-year mortgage rate falls to 4.01 percent - likely to fall further?
Fixed mortgage rates have fallen to historic lows for a fourth straight week and are likely to fall further.
The average on a 30-year fixed mortgage fell to 4.01 percent from 4.09 percent last week, Freddie Mac said Thursday. That's the lowest rate since the mortgage buyer began keeping records in 1971. The last time long-term rates were lower was in 1951, when most long-term home loans lasted just 20 or 25 years.
The average on a 15-year fixed mortgage, a popular refinancing option, ticked down to 3.28 percent. Economists say that's the lowest rate ever for the loan.
Mortgage rates tend to track the yield on the 10-year Treasury note. The 10-year yield has risen this week to around 2 percent. A week ago, it touched 1.74 percent - the lowest level since the Federal Reserve Bank of St. Louis started keeping daily records in 1962. As recently as July, the 10-year yield exceeded 3 percent.
Rates on mortgages could fall further after the Federal Reserve announced that it would take further action to try to lower long-term rates.
Still, low rates have so far done little to boost home sales or refinancing. Many would-be buyers or homeowners don't have enough cash or home equity to get a new loan.
High unemployment, scant wage gains and debt loads represent a heavy burden for many people. Others can't qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers.
This year is shaping up to be among the worst for sales of previously occupied homes in 14 years. Few are buying, even though the average rate on the 30-year fixed mortgage has fallen to around 4 percent.