Mortgage Rates Ease Record Pace: 30-Year Fixed at 4.35%

Updated Sept. 10, 2010: 
Morgtgage fixed rates slowed their record pace for the first time since June, with the 30-year-fixed rate climbing to 4.35 percent, slightly above last week’s record low of 4.32 percent, according to Freddie Mac.

The 15-year fixed rate was unchanged, holding at its record low mark set last week at 3.83 percent.

Despite prices of Treasury bonds pulling back somewhat in recent days, mortgage rates continued their historic slide last week, setting record lows for the 10^th time in 11 weeks.

Freddie Mac has kept records on the benchmark long-term rate since 1971.

Rates have been dropping since investors have been shifting heavily into the safety of Treasury bonds, pushing yields down. Yields on Treasuries move inversely to prices. Mortgage rates tend to track Treasury yields. Debt prices fell today, though, as investors took profits ahead of tomorrow’s unemployment report.

Treasuries tend to trade lower as more positive economic news emerges, though there had been little but fears of a double-dip recession in recent weeks.

This week, five-year Treasury-indexed hybrid adjustable-rate mortgages were at 3.56 percent, just above the previous week’s 3.54 percent.

One-year Treasury-indexed ARMs were at 3.46 percent, down from last week’s  3.50 percent. 

Federal Reserve chairman Ben Bernanke said in an August 27th speech that with inflation expectations reasonably stable and the economy growing – however sluggishly –  inflation should remain near current readings for some time before rising slowly.

“As a result, mortgage rates eased further this week to new historic lows,” said Amy Crews Cutts, deputy chief economist, Freddie Mac.

House prices, however, appear to be firming, Cutts added.

She noted that home prices rose 2.3 percent between the first and second quarter of this year, reaching the highest level since the fourth quarter of 2008, according to the S&P/Case Shiller National Home Price Index.