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Interest rates fall to another record low this week
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BANKRATE.COM
Mortgage rates fell this week and set a new record low -- again -- as investors welcomed recent improvements in the U.S. economy, while wondering if Greece really is near a deal to solve its debt problems.
The benchmark 30-year fixed-rate mortgage fell 4 basis points this week to 4.1 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.35 discount and origination points. One year ago, the mortgage index was 5.16 percent; four weeks ago, it was 4.18 percent.
The benchmark 15-year fixed-rate mortgage fell 1 basis point to 3.35 percent. The benchmark 5/1 adjustable-rate mortgage fell 2 basis points to 3.03 percent
This is the lowest the rate on the 30-year fixed mortgage has reached in the 26-year history of Bankrate's weekly rate survey. The previous record was 4.12 percent on Feb. 1.
Recent economic reports show the economy is strengthening, and that's "supposed" to be pushing rates up, says Michael Becker, a mortgage banker at WCS Funding in Baltimore. "But Greece seems to be holding them down."
Manufacturing figures released this week show production volume in U.S. factories increased in January and was better than expected in December. Production increased 0.7 percent in January and 1.5 percent in December, says the Federal Reserve. December was the month with the biggest growth in manufacturing in five years.
Another positive sign for the economy was the housing report by the National Association of Homebuilders, released Wednesday. The NAHB's housing market index climbed to 29 in February from 25 in January. That's the highest the index has reached since May 2007. The index measures builders' assessments of current single-family home sales, traffic from potential buyers and sales expectation for the next six months.
Foreclosures are still competing with new-home sales, and many builders are seeing appraisals come in at less than the cost of construction.
During the boom, the index was in the 70s. In 2009, it reached a low of 8 percent.
The January retail sales report, also released this week, was less than what economists had expected, but it shows sales picked up slightly. Sales rose 0.4 percent last month, according to the Commerce Department. While that's a slight increase, it's better than December, when sales were flat.
But until investors feel confident about the debt situation in Greece, they will leave their money parked in safe investments such as U.S. Treasury bonds, he says. When investors seek safety in bonds, mortgage rates tend to drop.
On Wednesday, Greek leaders agreed to terms of a new financial bailout to prevent the country from defaulting on its debt.
Investors were hopeful a deal would be reached soon, but there is talk that some of Greece's eurozone creditors may delay the bailout until after Greek elections in April.
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Interest rates are simply incredible on mortgages right now. It's not uncommon to see 30 year rates down in low fours and 15 year rates in the threes. Week after week, the rates keep dropping If you are looking for rates in three then search online for 123 Refinance and learn how to do refi.