Mortgage Rates Reach Another Record Low
For the second week in a row, US mortgage rates fell to historically low levels this week, according to a weekly survey from Freddie Mac. Interest rates are falling as a result of market volatility brought on by the ongoing sovereign debt crisis in the European Union, which is driving investors to the relative safety of Treasury bonds, driving up their prices and pushing down their yields, which are used as a benchmark to determine interest rates.
In the week ending Thursday, 30-year, fixed-rate mortgages averaged an interest rate of 4.09 percent, down from 4.12 percent a week ago. It's the lowest average rate ever recorded for the mortgage since Freddie Mac began tracking it in 1971. The average rate for a 15-year fixed loan droppes, as well, from 3.33 percent a week ago to 3.30 percent.
As more and more investors withdraw funds from the volatile stock markets, the yield on the 10-year Treasury is approaching an all-time low. And the trend appears ready to stick around for some time as there are still no signs that the US economic recovery is picking up any steam and the debt crisis in Europe will likely take some time to subside. In this rather discouraging environment, low borrowing costs have not made much of an impact on the nation's struggling housing market, and analysts predict that conditions will remain tough until there is significant improvement in the job market.