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Fed program sends mortgage rates to new lows

By Palm Beach Business.com

DELRAY BEACH — The Fed’s bond-buying effort to stimulate the economy may or may not produce more jobs in the end but there’s no question it is accomplishing one key goal: it’s pushing mortgage rates down, and dramatically so.

The 30-year fixed-rate mortgage dropped to an average of 3.40 percent with 0.6 point from 3.49 percent a week earlier, according to Freddie Mac’s Primary Mortgage Market Survey. The rate is a record low for the survey.

Bankrate found an even sharper drop in the 30-year, to 3.55 percent with 0.39 point from 3.70 percent a week earlier.

Both organizations cited the Federal Reserve ’s ‘quantitative easing,’ or bond-buying effort as the key driver in the lower rates. The Fed is specifically targeting mortgage-backed securities as a means of making more money available for the housing market.

Also according to the surveys, the 15-year fixed-rate mortgage dropped to 2.73 percent with 0.6 point from 2.77 percent a week earlier, according to Freddie. Bankrate had the 15-year dropping to 2.88 percent with 0.29 percent from 2.95 percent a week earlier.