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Mortgage Rates Hit More Record Breaking Lows

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Mortgage rates fell to a new low last week as worries about the strength of the economic recovery brought Treasury yields to new lows. Housing continues to be a hard market to call with more economists and market watchers taking a bullish stance this week, persuaded by promising highlights in another batch of mixed data.

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The 30-year fixed mortgage rate hit 3.49% and the 15-year dropped to 2.8%, according to data from Freddie Mac. Those figures are down from 3.53% and 2.83%, respectively, the week prior. The 30-year rate is now more than one percent lower than a year ago, when it averaged 4.55%. (Track the rate in the chart below)

That's not lost on homeowners looking to refinance. Mortgage application volume ticked 0.9% higher according to an index by the Mortgage Bankers Association, while the Refinance Index increased 2% from the previous week to its highest level since April 19, 2009. The refinance share of mortgage activity increased to 81% of total applications from 80 percent the previous week.

The housing bulls and bears have been long locked in debate about whether a bottom is in, imminent, or neither. This week, Zillow Chief Economist Stan Humphries exited the bear camp and said "it seems clear" the bottom is in, citing organic strength that's appearing in the housing market despite lackluster jobs growth.

Zillow reported its U.S. home value index climbed 0.2% in the second quarter vs. a year ago, the first increase since 2007. The index rose 2.1% vs. the first quarter, the strongest gain since 2005.

The Federal Housing Finance Association housing price index rose in May, by 0.8%, after rising 0.7% in April. But the data continue to be mixed: New home sales for June came in below expectations, at 350,000, down from 382,000 in May, according to a report on Wednesday. And pending home sales fell 1.4% in June after a 5% jump in May, according to data released earlier today.

The result? More debate on the housing bottom.

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