30-Year Mortgage Hits New Historical Low

The Federal Reserve’s plan to save the housing industry by lowering interest rates has kicked in: The 30-year fixed-rate mortgage (FRM) dropped below 4 percent this week for the first time in history.
But, again, Chicago Real Estate Forum must ask: Are lower rates enough to spur a recovery?
gold percentage symbol with an arrow pointing downThe 30-year FRM averaged 3.94 percent for the week ending October 6, according to Freddie Mac. That’s a drop from last week’s 4.01 percent and the lowest average ever.
The 15-year FRM also hit a new record low, averaging 3.26 percent this week after last week’s 3.29 percent.
The 5-year Treasury-index hybrid adjustable-rate mortgage (ARM) dropped from 3.02 percent last week to 2.96 percent this week.
Only the 1-year Treasury-indexed ARM rose this week, averaging 2.95 percent after recording 2.83 percent last week.
So? Are the historically low rates making a difference?
According to the Mortgage Bankers Association latest report, applications for home loans fell 4.3 percent and refinancing activity dropped 5.2 percent.
“Interest rates continued to fall last week, driven by the latest Federal Reserve actions to invest in longer-term Treasury and mortgage securities,” said Mike Fratantoni, MBA’s Vice President of Research and Economics, “but potential borrowers largely remained on the sidelines, seemingly unimpressed by the lowest (by any measure) mortgage rates since the 1940s.”