Mortgage Rates break 5 Percent Level

Surprisingly, mortgage rates dropped to their lowest levels this year even as some economist expressed concerns that the end of some government programs may signal another round of mortgage rate increases. The drop closely reflected the movement of interest rates on long term Treasury bonds.

Improved mortgage rates are largely due to shifts in investor sentiments as the continuing European debt crisis has moved them into the more stable long term US bonds. Long term US Treasury bonds and commodities like gold have long been a safe haven for many investors when financial markets have been in turmoil.

Average rates for 30 Yr FRMs fell to 4.93 percent last week against the previous week’s 5 percent rates. This was also the lowest since 30 Yr Fixed Rate Mortgage rates reached a record low of 4.71 percent in December. The government program ended this March but treasury officials have indicated that they would keep the doors open when the housing market’s recovery looses steam.

The average fixed rate dropped to a record low of 4.71 percent late last year, pushed down by a campaign by the Federal Reserve to reduce borrowing costs for consumers. The program ended this spring, but rates have remained low, especially after fears that Greece’s government would default shook world markets.

15 Year Fixed Rate Mortgages stood at 4.3 percent a slight improvement from last week’s 4.36 percent. Average rates for 5 Year Adjustable Rate Mortgages also went down to 3.95 percent and One Year Adjustable Rate Mortgages also improved to 4.02 percent from the previous weeks 4.07 percent.

Reported by REOProteams

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