It took a few weeks, but mortgage rates finally fell to new record lows, sparked by word the Fed was planning to buy up more mortgage-backed securities and treasuries.
The benchmark 30-year fixed averaged 4.85 percent for the week ending March 26, down from 4.98 percent a week earlier and 5.85 percent last year, according to mortgage financier Freddie Mac.
The popular mortgage product has never been lower during the life of Freddie Mac’s weekly survey, which dates back to 1971.
The 15-year fixed averaged 4.58 percent, down three basis points from last week and well below its year-ago average of 5.34 percent; also a record low.
“The Federal Reserve’s announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed,” said Frank Nothaft, Freddie Mac vice president and chief economist.
“Rates for 30-Yr FRMs peaked last year at 6.63 percent on July 24th. With this week’s 30-Yr FRM, the interest rate difference is almost 2 percentage points, which amounts to a savings of about $225 in monthly mortgage payments for a $200,000 loan.
Adjustable-rate mortgages saw less movement, with the five-year hybrid falling just two basis points to 4.96 percent (but still a record low) and the one-year ARM sliding six basis points to 4.85 percent.
A year ago, the five-year averaged 5.67 percent and the one-year stood at 5.24 percent.
“Potential homebuyers are taking notice of these historically low mortgage rates,” said Nothaft. “Both new and existing home sales rose 5 percent in February.”
“First-time homebuyers accounted for half of all existing home sales, according to the National Association of Realtors®. In addition, mortgage applications for home purchases consecutively rose over the first three weeks in March, based on figures published by the Mortgage Bankers Association.”
(photo: stevelodefink)
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