Mortgage rates dropped for the ninth time in the last 10 weeks to another low record amid growing worries that the U.S. economy is weakening, according to Freddie Mac. The rate on a 30-year fixed rate mortgage fell to 4.36%.
The rate was 4.42% last week. It’s the lowest since Freddie Mac has been keeping records since 1971. The average rate on a 15-year fixed rate mortgage also dropped again to 3.86% or lower by .04 from the previous week.
“Existing home sales plunged 27% in July, while new home sales fell 12% to a new all-time record low, which led to some market concerns that the housing market may slow the economic recovery,” said Freddie Mac deputy economist Amy Crews Cutts.
Mortgage rates have been on a downward slide since last spring as retail investors on Wall Street shied away from buying stocks in exchange for purchasing bonds, which they have considered to be a safer investment. Much of the trading on Wall Street these days is attributed to short sellers and machine trading to make fast money in the market.
The lower rates have been attractive to homeowners, who make up the over-whelming majority of mortgage financing at 82.4% of all loan activity on home mortgages. But new home loan applications remain weak, demonstrating that home sales are already entering a fall time slump as a result of the federal government’s home buyer’s tax credit expiration. More restrictive mortgage under-writing criteria is also making it difficult for many homeowners seeking refinances to obtain a new loan.
Freddie Mac regularly surveys lenders across the nation to determine the average rates as part of an on-going program to determine the activity of the mortgage market. The data provides a snap shot into new home mortgage financing and the overall housing market.