Mortgage Rates Remain Near Record Lows

By Kevin Chiu

Mortgage rates remained near record low levels for the third week in a row as consumer concerns over the U.S. economy gave into positive Rates news about the improving state of the economy, despite unemployment levels that have been at the highest levels in the nation’s history since the Great Depression.

The 30-year fixed rate mortgage averaged 4.00%, up a single basis point from last week, according to Freddie Mac. An overhaul of the Home Affordable Modification Program (HAMP) announced earlier this week, is also expected to drive a major increase in mortgage refinances as Fannie Mae and Freddie Mac eliminate loan-to-value ratios on refinancing to allow more homeowners to obtain lower mortgage payments.

The popular 15-year fixed rate loan averaged 3.31%, according to the giant lender with an average of 0.7 point, also up a single basis point from the prior week. The 5-year Treasury indexed hybrid adjustable rate mortgage averaged 2.97%, down a single basis point from last week.

retail shopping

“Mortgage rates were little changed this week just as the economy is showing potential for further gains in the near term,” said Freddie Mac chief economist Frank Nothaft.

Low mortgage interest rates were aided by an increase in retail sales for the fifth straight month in October, which beat the market consensus forecast. Consumer confidence also rose for the third consecutive month in early November to the highest reading since last June, according to the University of Michigan index.

The 30-year fixed rate mortgage hit 3.94% last October to reach the lowest level in recorded history. Banks and mortgage companies that offer home mortgages to consumers set rates independently after the Federal Reserve sets rates it will lend money to banks at to keep the economy moving.

However, lenders have been reluctant to offer many home mortgages or loans to business in the fallout of the financial crisis in order to retain high reserves to cover losses on loans that go into default and become part of the record breaking foreclosure crisis.