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Third Straight Week of Record Mortgage Loan Rates

Three downward interest rates
Freddie Mac announced Thursday that the average fixed mortgage rates hit record low levels again. This is the third straight week that fixed-rate mortgages have broken the floor on their historic records.

The 30-year fixed rate mortgage loan averaged at 3.79 percent for the week ending on May 17, 2012. That’s down from last week when it averaged at 3.83 percent. Given that last week was a historic record, this week’s 0.04 percent jump is enormous.

Last year at this time, the average 30-year fixed rate mortgage loan was offered at 4.61 percent—almost a full percentage point higher.

The 15-year fixed rate mortgage loan averaged at 3.04 percent, which is down from 3.05 percent last week. This was a smaller gap between last week’s historic low when compared to the 30-year rate, but this week marks a new record for the 15-year nonetheless.

Last year at this time, the average 15-year fixed rate mortgage loan rested at 3.80 percent—a full three-quarters of a percent higher than today’s rate.

To explain this amazing phenomenon we’ve been witnessing, Frank Nothaft, the vice president and chief economist with Freddie Mac, said, “The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields on fixed mortgage rates to ease for another week. For instance, industrial production rose 1.1 percent in April—the largest gain since December 2010—and consumer sentiment in May rose to its highest reading since January 2008 according to the NAHB/Wells Fargo Housing Market Index.”

Another positive byproduct of these rates was found in the home construction industry, reported Freddie Mac.

Housing starts rose to an annual rate of 717,000 homes in April, which has far exceeded expert’s forecasts, and construction of single-family residences has increased to its strongest point in three months.

Like consumer sentiment, the NAHB/Wells Fargo Housing Market Index revealed that homebuilder confidence has reached its highest level since of January 2008 as well.

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