Fixed-Mortgage Rates Post New Lows

How low can they go?
Thanks to a struggling economy, fixed-rate mortgages hit yet another low for the year after falling for the seventh week in a row.
According to data from Freddie Mac for the week ending June 2, the 30-year fixed-rate mortgage (FRM) fell from its average of 4.60 percent last week to 4.55 percent this week, and rates on the 15-year FRM averaged 3.74 this week, down from 3.78 last week.
Dice with interest signs on them.Frank Nothaft, vice president and chief economist for Freddie Mac, said there are several economic factors pushing rates lower.
“Fixed mortgage rates followed U.S. Treasury yields lower this week amid financial market concerns that the current lull in the economy is continuing,” he said. “First quarter growth in consumer spending was revised downward by half of a percentage point to 2.2 percent, according to the Bureau of Economic Activity, consumer confidence in May was weaker than the market consensus forecast, and the manufacturing industry slowed for the third straight month in May.
“The housing market is showing strain as well. The S&P/Case-Shiller® National Home Price Index fell 5.1 percent between the first quarters of 2010 and 2011, representing the largest annual decline since the third quarter of 2009. In addition, the index of pending existing home sales dropped 11.6 percent from March to April, led by the Midwest and South regions where the tornados and flooding occurred.”
Rates on adjustable mortgages did not fall this week.
The average rate on a 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) remained the same from last week at 3.41 percent, and the average rate on the 1-year Treasury-indexed ARM actually increased from 3.11 percent last week to 3.13 this week.