Mortgage rates plummet to historic low as economy weakens

National mortgage rates are dropping sharply amid falling bond yields and signs of a weaker than expected economy, a report released today by Freddie Mac shows, with the average rate on a 15-year fixed mortgage falling to its lowest level in decades.

“Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and five-year [adjustable-rate mortgage] setting new historical lows,” said Frank Nothaft, president and chief economist at Freddie Mac.

The 15-year fixed-rate mortgage averaged 3.54 percent for the week ending Aug. 4, with an average of 0.7 point, a new low, down from last week’s 3.66 percent. The 30-year fixed-rate mortgage averaged 4.39 percent with an average 0.8 point for the week, down from last week’s 4.55 percent. Fifteen- and 30-year fixed-rate mortgages averaged 3.95 percent and 4.49 percent, respectively, one year ago.

“On a positive note,” Nothaft said, “there were indications that the housing market is firming. Real residential fixed investments added growth to the economy in the second quarter after subtracting from growth over the first three months of the year.” — Katherine Clarke