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Freddie Mac finds 30-year mortgage now under 4 percent
By Palm Beach Business.com
DELRAY BEACH — Consider “Operation Twist” a success, judging by this week’s mortgage rates. A 30-year mortgage can be had with an interest under 4 percent.
The Federal Reserve several weeks ago announced a plan dubbed Operation Twist to buy up long-term Treasury bonds as a means of bringing down long-term interest rates and spurring lending. Freddie Mac’s Primary Mortgage Market Survey, released Thursday, found the average 30-year, fixed-rate mortgage dropping to 3.94 percent with 0.8 point from 4.01 percent a week ago.
Two weeks ago, the 30-year averaged 4.09 percent.
Bankrate’s national mortgage survey paralleled Freddie Mac’s survey. It dropped to 4.21 percent with 0.43 percent, down from 4.30 percent a week earlier.
Economic concerns that brought down stocks late last week and early this week also played a role in lowering rates.
"Average 30-year conventional fixed mortgage rates fell below 4 percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew,” Freddie Mac Chief Economist Frank Nothaft said.
Nothaft said the 15-year fixed rate also set a record low, dropping to 3.26 percent with 0.8 point from 3.28 percent a week ago. Bankrate’s survey had the 15-year slipping to 3.46 percent with 0.38 point from 3.47 percent a week ago.
Another indication of the effectiveness of Operation Twist, the average rate for one-year ARM rose 12 basis points over the week to 2.95 percent with 0.5 point.
Bankrate noted that the last time mortgage rates were above 6 percent was November 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.21 percent, the monthly payment for the same size loan would be $979.20, a difference of $263 for anyone refinancing now.
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