Freddie Mac: Mortgage rates scrape bottom again


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Mortgage rates are scraping along near historic lows, Freddie Mac says in its latest survey of what lenders are offering to well-qualified borrowers.

The 30-year fixed-rate mortgage averaged 4.22% early this week, the same as the week before, and just above the 4.15% record low reached two weeks ago.


The rate on a 15-year fixed mortgage dropped to 3.39% this week from 3.44%.

Borrowers on average would have paid lenders 0.7% of the loan amount upfront to get a 30-year loan and 0.6% on a 15-year loan, said Freddie Mac, the giant government-controlled finance company.

Meanwhile, for loans that become adjustable after five years at a fixed rate, the initial rates fell again, setting all-time lows for the eighth straight week, Freddie Mac said. Such loans indexed to Treasury bonds had an average starting rate of 2.96% this week, down from 3.07% last week. Upfront lender fees averaged 0.6%.

Economists said weaker economic signals and slowing home sales were keeping rates low. There’s little immediate fear of inflation and the Federal Reserve has said it expects to hold its benchmark short-term rate close to zero through the middle of 2013.

‘In addition,’ Freddie Mac economist Frank Nothaft said Thursday, ‘consumer confidence in August fell to the lowest reading since April 2009.’

The result? An early-August surge of interest in mortgages, driven by homeowners refinancing at rates under 4.5%, appears to be running low on steam.

A Mortgage Bankers Assn. survey of mortgage applications, released Wednesday, showed the volume decreasing for a second straight week.


The lobbying group has revised its projections of mortgage volume for this year because of the refinancings. It now expects $1.1 trillion in residential mortgages to be originated in 2011, $100 billion more than earlier forecasts.

But adjustments for the weak economy have the home-lending association reducing its outlook for 2012. The group cut its forecast for mortgage volume next year to just $931 billion, which would be the lowest since 1997.


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-- E. Scott Reckard