Mortgage rates sink to record lows
Jim McIntosh, broker owner of Complete Home Realty in Holbrook, says he doesn’t expect a big bump in home sales because people are waiting for a clear sense on where this economy is going. (Aug. 1, 2011) Credit: Newsday/John Paraskevas
All four mortgage interest rates tracked by Freddie Mac hit lows this week -- the first time the home finance giant has seen its previous records obliterated at once.
The 30-year fixed rate fell to 4.15 percent from last week's 4.32, beating the old record of 4.17 last November and the lowest since Freddie Mac began charting this rate in 1971. Officials said other federal data indicates the rate was the lowest in more than 50 years.
The rate was 3.36 percent for 15-year mortgages, the lowest in 20 years of Freddie Mac data for this rate, beating last week's low of 3.5. The five-year adjustable rate was 3.08 percent, down from last week's 3.13, and the one-year adjustable was 2.86 percent, down from 2.89.
The lows are good news for buyers, but it's bad economic news that usually drives down borrowing rates.
The drops stemmed from concern over European countries' debt and the Federal Reserve announcement last week to keep banks' borrowing rate at zero until 2013, said Frank Nothaft, Freddie Mac's vice president and chief economist.
Long Island mortgage and real estate veterans don't expect an explosion in home sales. People aren't confident enough to make big purchases, they said.
"You'll see a lot of people waiting, just waiting for what we don't know or waiting to get some type of clear direction on where this economy is going." said Jim McIntosh, broker owner of Complete Home Realty in Holbrook.
The record lows confounded many real estate experts who have been saying historic lows were history.
Mike McHugh, head of Continental Home Loans in Melville, chuckled Thursday about eating his words: "First of all, I don't think anybody expected the economy to go this badly."
But he's amazed by the number of people who didn't refinance last year and are now coming forward. Such deals rose 20 percent from a month ago, due partly to homeowners who can't sell and are consolidating debt, he said.
Next week, rates could be even lower. Some rates are tied to yields in the 10-year Treasury notes, and Thursday at one point, the yield was under 2 percent, the lowest in a year.
