Mortgage rates at at 60-year low
Posted by Nancy Comenitz on Thursday, May 20th, 2010 at 2:59pm.The benchmark 30-year fixed-rate mortgage fell 11 basis points this week to 4.96 percent, according to bankrate.com national survey of large lenders. One year ago, the same loan was 5.24 percent, and four weeks ago it was 5.22 percent.
The benchmark 15-year fixed rate mortgage rate also fell 11 basis points, to 4.34 percent. The 5/1 adjustable rate mortgage fell to 4.14%.
The National Bureau of Economic Research identified rates this low in October 1956.
Due to the financial instability in Greece, Portugal, Ireland and Spain, the European Central Bank along with the International Monetary Fund unveiled a $955 Billion loan package. Like the Tarp plan, the European Central Bank will purchase Bonds and private debt from the countries facing instability.There is concern whether this plan is a band-aid and whether $955 Billion is enough money to bail these countries out. The result has led to a weaker Euro. Capital has begun to come across the ocean to America for a "safe haven". This new capital into our country is what has caused our rates to drop.
The economists do not expect the flow of money to last. Whenever the European or Chinese economy recovers, rates will rise.
More Good News
In April 21st meeting of the Federal Open Market Committee, the Federal Reserve policy makers showed they were in no rush to sell $1.1 trillion of mortgage-backed securities. "Most participants favored deferring asset sales for some time". Officials expected inflation to remain "below rates that would be consistent in the longer run with the Federal Reserve's dual objectives" of maximum employment and stable prices.At last month's meeting, policy makers voted 9-1 to retain a pledge to keep the federal funds rate at a record low for an "extended period".
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