So much for history – after reaching 50-year lows on Aug. 18, the 30-year FRM from Freddie Mac has hit a new historical low, this time reaching 4.12 percent.
In addition, the 15-year FRM fell 0.6 percent to 3.33.
According to Frank Nothaft, the vice president and chief economist of Freddie Mac, a number of factors contributed to the historically-low rate, namely debt worries overseas and domestic economic worries.
“Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields and allowed fixed mortgage rates to hit new lows this week,” Nothaft said.
In an interesting twist, though, the lower rates have not inspired an influx of borrowing; if anything, they appear to have had the inverse effect, said Patrick Newport of IHS Global Insight.
“Homebuyers are not responding to these record-low interest rates,” Newport said. “The reason interest rates are dropping recently is that the outlook for the economy has gotten weaker. A smart person would be very careful about buying a home unless he thinks his job is very secure.”
Last week, mortgage applications dropped 4.9 percent, according to data by the Mortgage Bankers Association, and the association’s refinancing index also fell to 6.5 percent.