Mortgage rates sink to record low but trend won’t last: Freddie

Miami /
May.May 28, 2010 09:00 AM

The average rate on a 30-year fixed rate mortgage dropped to 4.78 percent this week from 4.84 percent a week earlier, according to a primary mortgage market survey released by Freddie Mac. It was the lowest level since early December, when rates fell to a record low of 4.71 percent. Also this week, the average rate on a 15-year fixed-rate mortgage fell to 4.21 percent, the lowest level in almost two decades. Analysts attribute the drops to the European debt crisis, which has also caused yields for 10-year and 30-year Treasury bonds to dip to their lowest levels of 2010. But once Europe springs back and the U.S. economic recovery stays on track, rates are likely to move higher since traders will move their money back into riskier investments, analysts predict. “These low rates will help to elevate homebuyer affordability and soften the effects of the sunset of the homebuyer tax credit,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “The credit substantially propelled home sales, as reflected in the strength of the April existing and new home sales, which were up 7.6 percent and 14.8 percent, respectively.” TRD

 

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