Interest rates on long-term mortgage loans fell back to record lows in the latest week, according to mortgage finance company Freddie Mac.
During the week ended January 5, the average rate on a 30-year fixed rate mortgage (FRM) dropped back down to 3.91 percent, excluding points, tying the previous all-time low from two weeks ago. This is the fifth straight week of 30-year FRM rates below 4 percent.
Mortgage loans with a term of 15years carried an average rate of 3.24 percent, only slightly higher than the record low of 3.21 percent, also reached two weeks ago.
Rates on one-year adjustable rate mortgages were up, however, moving up to 2.80 percent from 2.78 percent the previous week.
“Fixed mortgage rates started the year a little lower this week just as recent data reports indicate the housing market and manufacturing industry are showing signs of improvement,” said Freddie Mac vice president and chief economist in a statement. “Pending existing home sales in November jumped 7.3 percent, nearly five times greater than the market consensus forecast, to its strongest pace since April 2010. In addition, construction spending rose 1.2 percent in November, supported by the residential sector which exhibited its fourth consecutive monthly increase. Similarly, manufacturing expanded in December at the fastest pace in six months.”
Even with record low rates, mortgage applications have lagged in the past several weeks. The Mortgage Bankers Association reported that total mortgage loan requests fell 3.7 percent during the last two weeks of December, even adjusting for the “typical seasonal decline.”
Applications are expected to stay low until the U.S. unemployment rates sees some significant improvement.