30-Year Mortgage Rate Falls to Record Low
The average rate on a 30-year mortgage in the U.S. has fallen below 4% for the first time on record as the housing market continues to flounder.
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The average rate for a 30-year fixed loan fell to 3.94% in the week ending October 6, after closing last week at just 4.01%, according to Freddie Mac. This week’s mortgage rate is the lowest on the company’s records, which date back to 1971. The average 15-year mortgage rate also declined, from 3.28% last week to 3.26% today.
Broken down regionally, the 30-year mortgage rate in the West declined to 3.87%, while falling to 3.92% in the Northeast, 3.97% in the North Central area, 3.99% in the Southwest, and 4.02% in the Southeast. A year ago, the overall 30-year rate was at 4.27%.
Mortgage rates have been sliding alongside 10-year Treasury yields on concern that Europe’s sovereign debt crisis is worsening, and that the U.S. economy could slide back into recession. Despite low borrowing costs, the housing market in the U.S. remains weak as unemployment hovers above 9% and home values continue to decline.
Home-loan applications declined 4.3% in the week ending September 30, compared to the previous week. Meanwhile, the refinancing gauge fell 5.2% while the purchasing measure fell 0.8%.
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This week, new loan limits were introduced for certain high-priced areas. Purchase applications fell 9.1% in September from the previous month, suggesting that buyers aren’t rushing to meet the deadline, and the new limits won’t have a significant impact on borrowing. In August, the number of contracts to purchase previously owned homes fell 1.2%, after falling 1.3% in July.