By Mike Colpitts
Despite a tight lending market, mortgage rates hit an all time record low reaching an average of 3.87% on the 30-year fixed rate loan, 
according to Freddie Mac. The rate broke the record average of just 3.88% struck two weeks ago.
Rates fell as a result of sluggish consumer demand for home mortgages and a drop in U.S. Gross Domestic Production, which came in below what economists surveyed thought GDP would do in the final quarter of 2011. Consumer spending in December, which is usually the biggest month of the year for retail sales due to the holidays, was flat. GDP came in at 2.8%, below the market consensus forecast of 3.0%.
“Most mortgage rates eased to all-time record lows this week as fourth quarter growth in the economy fell short of market expectations,” said Freddie Mac chief economist Frank Nothaft.
High unemployment, which averages 8.5% in the U.S. but is much higher in the hardest hit regions of the country is delaying an economic recovery in the majority of the nation. Home buyers, however, especially first time buyers are reaping the benefits of prices that haven’t been this affordable since 1971, according to HUD.
The decline in consumers spending, however, demonstrates an economy that lacks confidence for brighter economic conditions ahead as workers are
laid-off from their jobs. Those same unemployed workers are contributing to the foreclosure crisis, which is projected to reach new record highs in 2012.
The 15-year fixed rate loan also hit a new record low, averaging 3.14% with an average of 0.7 point. The rate beat its historic all-time low of 3.16% just three weeks ago. The same mortgage averaged 4.08% a year ago.
Mortgage rates have been at their historic all-time lows for three weeks. The 5-year Treasury indexed adjustable rate loan averaged 2.80%, up two basis points from last week.