Mortgage rates reach record low. Have they hit bottom?
Mortgage rates for 30-year fixed loans have dropped to a record low of 3.67 percent.
Average U.S.¬†rates¬†on 30-year and 15-year fixed¬†mortgages¬†this week fell to fresh record lows for the sixth straight week. Cheap¬†mortgages¬†continue to help boost prospects for home sales this year.
Mortgage¬†buyer Freddie Mac says the average¬†rate¬†on the 30-year loan dropped to 3.67 percent. That's down sharply from 3.75 percent last week and the lowest since long-term¬†mortgages¬†began in the 1950s.
The 15-year¬†mortgage, a popular refinancing option, declined to 2.94 percent. That's down from 2.97 percent last week.
Rates¬†on the 30-year loan have been below 4 percent since early December. The low¬†rates¬†are a key reason the housing industry is showing modest signs of a recovery this year.
A drop in¬†rates¬†could also provide some help to the economy if more people refinance. When people refinance at lower¬†rates, they pay less interest on their loans and have more money to spend.
A Federal Reserve survey issued Wednesday showed the economy growing moderately in most regions of the country this spring as companies continued hiring. Manufacturing and home sales improved in most of the Fed's 12 regional districts, as did residential and commercial construction.
In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market, breaking ground on more homes and requesting more permits to build single-family homes later this year.
Mortgage¬†applications rose by 1.3 percent during the week ended June 1, the¬†Mortgage¬†Bankers Association reported Wednesday, mainly because more people applied to refinance their homes. Applications to buy a home actually fell for the fourth straight week.
A better job market also has made more people open to buying a home. But a dismal jobs report for May from the government last Friday fanned fears that the economy is sputtering.
U.S. employers created only 69,000 jobs in May, the fewest in a year, and the unemployment¬†rate¬†ticked up.
The Labor Department also said the economy created far fewer jobs in the previous two months than first thought. It revised those figures downward to show 49,000 fewer jobs created. The unemployment¬†rate¬†rose to 8.2 percent in May from 8.1 percent in April, the first increase in 11 months.
The pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.
Many people are having difficulty qualifying for home loans or can't afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling.
Mortgage¬†rates¬†have been dropping because they tend to track the yield on the 10-year Treasury note, which fell last week to a 66-year low. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
To calculate average¬†rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average does not include extra fees, known as points, which most borrowers must pay to get the lowest¬†rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, down from 0.8 last week. The fee for 15-year loans also was unchanged at 0.7 point.
The average¬†rate¬†on one-year adjustable¬†rate¬†mortgages¬†rose to 2.79 percent from 2.75 percent last week. The fee for one-year adjustable¬†rateloans was steady at 0.4.