Friday, July 6, 2012

Lowest Ever -Average on the 30-year loan drop to 3.62 %

Mortgages Dip To Lowest-Ever Interest Rate Fri, Jul 06 2012 By THE ASSOCIATED PRESS

Fixed mortgage rates fell to new record lows, giv ing prospective buyers more incentive to brave a modestly recovering housing market.

Mortgage buyer Freddie Mac said Thursday that the U.S. average on the 30-year loan dropped to 3.62 %. That's down from 3.66% last week and the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year mortgage, a popular refinancing option, slipped to 2.89%, below last week's previous record of 2.94%.

The rate on the 30-year loan has fallen to or matched record low levels in 10 of the past 11 weeks. And it's been below 4 % since December.

Cheap mortgages have provided a lift to the long-suffering housing market. Sales of new and previously occupied homes are up from a year earlier. Home prices are rising in most markets. And homebuilders are starting more projects and spending at a faster pace.

Contracts to buy previously occupied homes rose in May, matching the fastest pace in two years, the National Association of Realtors reported last week. That suggests Americans are growing more confident in the market.

Low rates could also help the economy if more people refinance. When people refinance at lower rates, they pay less loan interest and have more money to spend.

Still, home sales remain well below healthy levels. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks. And with unemployment at 8.2%, the sluggish job market could deter would-be buyers this year.

Mortgage rates have been falling because they tend to track the 10-year Treasury note yield. A weaker U.S. economy and uncertainty due to Europe's debt crisis have led investors to buy more Treasury securities, considered safe investments. As demand for Treasuries increases, the yield falls.

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