U.S. rate on 30-year FRM hits record 3.36%
On Friday October 5, 2012 we saw a fresh record low for the second week straight on fixed rate mortgages. This low is leading more homeowners to refinance which could ultimately help jumpstart the economy.
The last week of September’s rate for Freddie Mac was at 3.4% (the lowest since long term mortgages began in the 50’s) but it fell even lower to 3.36% last week.
Fifteen year fixed mortgage dropped to 2.69% which was also down from the previous week’s record low of 2.73%. This product is very popular for homeowners looking to refinance.
The Federal Reserve starting buying mortgage bonds to help boost the housing recovery which results in falling rates. They plan to continue this program until there is significant improvement in the job market.
Resales and new construction sales are up from 2011 and home values are beginning to increase. Builder confidence level is up as well.
Mortgage applications jumped up 16.6% and 83% were to refinance existing loans (reported by the Mortgage Bankers Association).
When homeowners refinance, their monthly payments typically declines in turn leaving them more money to spend. “Consumer spending drives nearly 70% of the economic activity.”
***This article was published by The Associated Press, Oct 5, 2012