Mortgage Rates Slide to New Low

The Average Rate for 30-Year Fixed Loans Hits 4.44 Percent, the Lowest Since Tracking Began in 1971

// Source (AP)

Mortgage rates sank to the lowest level in decades this week, pushed down by the weak economy and the Federal Reserve’s move to help lift the recovery by purchasing government debt.

Mortgage buyer Freddie Mac says the average rate for 30-year fixed loans this week was 4.44 percent, down from 4.49 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on the 15-year fixed loan dropped to 3.92 percent, down from 3.95 percent last week and the lowest on record.

Rates have fallen since spring and the government’s July jobs report has investors worried about the country slipping back into recession. They are shifting more money into the safety of Treasury bonds, lowering their yields. Mortgage rates tend to track those yields.

And the Federal Reserve is pushing those yields down even further. The central bank said Tuesday it would buy Treasurys to help aid the recovery, using the proceeds from debt and mortgage-backed securities it bought from Fannie Mae and Freddie Mac.

That move alone will not be enough to push average rates down to 4 percent, said Bob Walters, chief economist at Quicken Loans. But rates that low are still a possibility if the economic outlook worsens even further. If investors became convinced that a renewed recession is likely, they would move even more money away from stocks and into bonds and mortgage debt. That would send rates down further.

“The silver lining to a bad economy is that interest rates fall,” Walters said. “If you can lower your debt burden by refinancing, that’s great.”