Mortgage rates continue to test new depths, with the 30-year fixed rate hitting 3.53%, down from 3.63% the week prior, according to Freddie Mac. The fixed-rate 15-year mortgage also hit a new all time low, touching 2.83%, down from 2.86% the week prior.
"With little signs of inflation and the Federal Reserve's 'Operation Twist' keeping U.S. Treasury bond yields in check, fixed mortgage rates are remaining low and helping to stir the housing market," said Frank Nothaft, vice president and chief economist, at Freddie Mac.
As rates continued to fall, mortgage demand increased last week. Mortgage application volume jumped 16.9% from one week earlier, according to data released on Wednesday by the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 13, 2012. The Refinance Index increased 22% from the previous week and is at the highest level since mid-June, after falling 3% the week prior. Mike Fratantoni, MBA's Vice President of Research and Economics, said that jump was largely related to record low mortgage rates.
Record low rates are nothing new, however, as you can see from the chart below. The average 30-year fixed has been below 4.00 percent all but one week in 2012. Last year at this time rates were nearly 1% higher, at 4.52%.
Average 30-year fixed-rate mortgage - Freddie Mac
Nothaft and others are taking a somewhat optimistic tone this week after new construction on one-family homes rose in June for the fourth straight month, and at its strongest pace since April 2010 and homebuilder confidence for the next six months rose for the third month in a row in July to its highest reading since March 2007.
Sobering retrospective data about the housing fallout are still rolling out. A report this week by the AARP based on mortgage data from 2007 through 2011 gave a glimpse of how retirees were impacted. More than 1.5 million Americans aged 50 and older lost their homes in the five years from 2007 through 2011, according to the data. The foreclosure rate was 2.9% in 2011 among all homeowners 50 and older, up from 0.3% in 2007.
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