30-Year Mortgage Interest Rate Plummets This Week
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UPDATED: Jun 21, 2012
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After the slight bounce seen in mortgage rates last week, prospective homeowners and refinancers will be happy to know that the 30-year mortgage rate fell once again, landing at a historic low of 3.66 percent.
The 30-year mortgage loan was averaging at 3.71 percent last week, so this half-a-percent drop is wonderful news for buyers.
Additionally, the 5-year adjustable rate mortgage loan (ARM) broke its historic low, as it landed at 2.77 percent this week, which is down from last week’s 2.80 percent.
For those looking to mortgage rates as a signal of the economy’s health, however, this may not be the most welcome report. Falling rates are often indicative of wounded economic factors.
“Treasury bond yields eased somewhat this week on some worsening economic indicators bringing mortgage rates back into record low territory,” explained Frank Nothaft, Freddie Mac’s vice president and chief economist.
The worsening economic factors, according to Nothaft, include employment and household spending. According to the Federal Reserve’s recent monetary policy announcement, employment has slowed and household spending is rising at a much slower rate than anticipated.
“However, there were also some positive indicators on the housing market,” said Nothaft. “Construction on one-family homes rose for the third consecutive month in May to an annualized pace of 516,000. Furthermore, homebuilder confidence rose in June to its highest reading in over five years.”
If this trajectory of increased housing production continues, then more properties will be available at historic low interest rates to those willing and able to buy.
The interest rates of the other two main types of mortgage loans also saw declines this week, but they didn’t break historic records.
The 15-year fixed rate mortgage loan landed at 2.95 percent—a slight drop from last week’s 2.98 percent.
The 1-year adjustable mortgage loan also fell slightly, landing at 2.74 percent.