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Freddie Mac sees mortgage rates setting record lows

By Palm Beach Business.com

DELRAY BEACH — Growing signs of a weakening economy sank mortgage rates across the board and in some cases to record lows.

Freddie Mac’s Primary Mortgage Market Survey found the average 30-year fixed-rate mortgage dropping to 4.39 percent with 0.8 point from 4.55 percent a week ago.
Bankrate’s national survey found the 30-year averaging 4.54 percent with 0.39 point, down from 4.74 percent a week earlier.

Both surveys were conducted before Thursday’s market meltdown, which drove yields on Treasury notes down substantially as investors moved their money out of stocks and into the relative safety of T bonds and bills. Mortgage rates generally are pegged to Treasury bond rates, particularly the 10-year bond.

"The economy grew 1.3 percent in the second quarter, which was below the market consensus forecast, and first quarter growth was cut to less than a quarter of what was originally reported,” said Frank Nothaft, Freddie Mac’s chief economist. “In fact, the first half of this year was the worst six-month period since the economic recovery began in June 2009. Moreover, consumer spending fell 0.2 percent in June, representing the first decline since September 2009.”

Both the 15-year fixed-rate mortgage and the 5/1 adjustable rate mortgage dropped to record lows, according to Freddie Mac. The 15-year hit 3.54 percent with 0.7 point, down from 3.66 percent a week ago. The 5/1 ARM dropped to 3.18 percent with 0.6 point from 3.25 percent a week earlier.

According to Bankrate, the 15-year is averaging 3.68 percent with 0.31 point, down from 3.83 percent last week. The 5/1 ARM dropped to 3.23 percent with 0.38 point from 3.34 percent a week ago.

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