By Mike Colpitts
Record low mortgage rates remained at their all-time record low this week as a troubled world economy jittered financial markets, according to Freddie Mac. The benchmark 30-year fixed rate loan held steady at its lowest level in U.S. history for the second week in a row.
The heavily watched 30-year mortgage averaged 3.87% with an average 0.8 point for the week matching last week. The fixed 15-year loan ticked up two basis points from the prior week to average 3.16%. The slight move up could signal that rates won’t remain at their all-time low for long as homeowners trying to refinance mortgages turn out in close to record numbers for refinancing.
Refinances have become so popular that Bank of America, the nation’s largest bank is telling applicants for refinancing to come back in a month or more. Other banks and mortgage lenders are picking up the back-log as lenders experience the heaviest volume of refinances in more than two years.
The surge in refinancing activity spurred by a new Obama administration program is welcome news for mortgage lenders, many of whom have had a difficult time making it through the tough economy.
“The economy gained 243,000 jobs last month, the largest monthly gain since April 2011,” said Freddie Mac chief economist Frank Nothaft. “And the unemployment rate fell to 8.3%, which was the lowest since February 2009.”
The 5-year Treasury indexed hybrid adjustable rate mortgage averaged 2.83% for the week, a three point basis hike from a week earlier. The 1-year ARM averaged 2.78%, which was two basis points over a week ago.
Mortgage rates are expected to remain low through at least 2014 after the Federal Reserve announced last week that it will keep its key lending rate it loans money to banks and other lenders to at close to 0. However, banks independently set lending rates for their customers for mortgages and other personal lines of credit, and may not keep the rates they charge at record lows for much longer.