Sixth Week of Record Mortgage Loan Interest Rates
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Written by
Sara Routhier
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Reviewed by
Joel Ohman
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UPDATED: Jun 7, 2012
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Freddie Mac announced Thursday that this week marks the sixth consecutive week that average fixed mortgage loan interest rates have fallen to record-breaking levels.
The 30-year fixed mortgage loan interest rate averaged at 3.67 percent, which dropped 0.08 percent from last week’s 3.75 record-low.
The 15-year fixed mortgage loan interest rate averaged at 2.94 percent, down 0.03 percent from last week’s record rate of 2.97.
The reason for this consistent decline in interest rates is due to a perfect storm of poor economic reports.
“Fixed mortgage rates reached record lows for the sixth consecutive week as long-term Treasury bond yields declined further following downwardly revised economic growth and job creation data,” said Frank Nothaft, vice president and chief economist at Freddie Mac.
Lending credence to Nothafts statement is the fact that employers created a meager 69,000 jobs in May, which is the lowest job-creating month the country has seen this year.
Coupled with that low job output is the fact that the average unemployment rate ticked up from 8.1 percent in April to 8.2 percent in May—which is the first time the unemployment rate has risen in the last 11 months.
Unfortunately, this rise in unemployment may not be the last one we see.
“The robust employment growth at the start of the year has clearly waned,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc., according to Bloomberg. “Hiring plans may have been put on hold amidst an increasingly uncertain outlook.”
Finally, home sales continue to rest well below what experts believe are healthy levels. While some are having a difficult time qualifying for mortgage loans, others are holding off on purchasing a house because they are continually seeing home prices drop. The catch-22, however, is that home prices will continue to decline if nobody is purchasing houses.