You guessed it; mortgage rates plummeted this week thanks to a recent move by the Federal Reserve to boost liquidity in the ailing mortgage market.
“This week’s decline was the largest since the week of November 27th, 1981, and 30-year FRM rates are now almost a full percentage point lower since the last week in October,” said Frank Nothaft, Freddie Mac chief economist.
According to Freddie’s latest weekly survey, the benchmark 30-year fixed-rate mortgage fell to 5.53 percent during the week ending December 4, down from 5.97 percent last week and 5.96 percent a year ago.
The popular mortgage program is now at its lowest point since January 24 of this year, and looks set to fall even lower.
The 15-year fixed averaged 5.33 percent, down from 5.74 percent a week earlier and 5.65 percent during the same period last year, its lowest point since March.
Meanwhile, adjustable-rate mortgages saw mild improvement comparatively, with the five-year ARM down nine basis points to 5.77 percent and the one-year ARM slipping to 5.02 percent from 5.18 percent a week ago.
A year ago, the five-year averaged 5.75 percent and the one-year stood at 5.46 percent.
Freddie’s survey uses data from conforming mortgages with a loan-to-value ratio of 80 percent.
While the low rates may be welcome news for borrowers with enough equity to refinance to a more sustainable payment, it remains to be seen if potential homebuyers will make a move.
Home prices are still quite expensive, and some experts believe mortgage rates could fall as low as 4.50 percent in the near term.
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