Mortgage Rates Hit New Lows

Mortgage rates are starting the year off with a bang and have hit new record lows.
That includes the 30-year fixed-rate mortgage, which fell below 4.0 percent last year for the first time on record dating back to 1971 and has remained there for the last six weeks.
Freddie Mac released its Primary Mortgage Market Survey for the week ending January 12, 2012, to show all four mortgage-rate options falling to new all-time lows.
*30-year fixed-rate mortgage (FRM): Dropped from last week’s 3.91 percent to 3.89 percent this week. Last year at this time, the 30-year FRM averaged 4.71 percent.
*15-year FRM: Dropped from 3.23 percent last week to 3.16 percent this week. A year ago, the 15-year FRM averaged 4.08 percent.
*5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM): Fell from 2.86 percent last week to 2.82 percent this week. During this same week last year, it averaged 3.72 percent.
*1-year Treasury-indexed ARM: Fell from 2.80 percent last year to 2.76 percent. Last year, the 1-year ARM averaged 3.23 percent.
Historically low mortgage rates are great, but home buyers need incomes to pay for mortgages. As usual, it all ties back to job creation.
“Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” said Frank Nothaft, vice president and chief economist of Freddie Mac.
“Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated. The 2009 to 2011 period had the highest three-year average unemployment rate since 1939 to 1941. Moreover, the Federal Reserve indicated in its January 11th regional economic review that most industries saw limited permanent hiring at the end of last year.”
Still, the low rates have spurred activity. According to the Mortgage Bankers Association, mortgage-loan applications increased 4.5 percent for the week ending January 6. That includes a refinancing index increase of 3.3 percent and a purchasing index spike of 8.1 percent.
Let’s hope the upward trend continues.