By Ryan Jackson
Driven by falling U.S. Treasuries, mortgage rates fell to their lowest level in U.S. history for the third week in a row as worries over the economy trouble financial markets. The 30-year fixed rate mortgage dropped to average 3.49%, according to Freddie Mac. Rates have been on a one-way move downward since the beginning of summer.
The rate on the fixed 15-year loan also fell to a new low to average 2.80% as homeowners flock to shorter term mortgages to refinance. Refinancing is at a three year high, according to Freddie Mac.
The 5-year Treasury indexed hybrid adjustable rate mortgage, however, rose for the week hitting an average of 2.74%, up from 2.69% a week ago. The 1-year ARM also jumped two basis points to average 2.71%.
Despite the record low mortgage rates, weaker home re-sales and slow new home sales hinder the recovery in housing.
“Market concerns over the strength of the economic recovery brought long-term Treasury yields to new lows this week allowing fixed mortgage rates to reach record levels,” said Freddie Mac chief economist Frank Nothaft.
“The Conference Board Leading Economic Index showed the largest monthly decline in June since September 2011. Existing home sales fell to 4.36 million homes (annualized) in June and represented the slowest pace since October 2011. Similarly, new home sales fell in June to their lowest level since January of this year.”
Sales of existing homes usually have their busiest season of the year during summer, but home sales remain off by historic terms and aren’t expected to budge much in most areas of the country. High unemployment and growing concerns about the world economy hold back a full recovery from developing.