Rates Slide To 30-Year Low

Refis, rates expected to improve
By SAM GARCIA
11/9/2001

Fixed mortgage rates slipped to their lowest levels in thirty years, as Freddie Mac reported the average thirty-year fixed rate at 6.45%, down eleven basis points (BPS) from last week. The fifteen-year fixed rate was reported at 5.94 percent, down 10 BPS.

Freddie Mac's chief economist noted that Friday's employment figures for October confirmed that the US economy is indeed in a recession. "That news, along with a slowdown in consumer spending and low consumer confidence, is having a drag effect on the economy, which allows mortgage rates to fall further, as they did this week," Robert Van Order said. "When the Federal Reserve Board cut rates last Tuesday, they indicated a bias towards further rate cuts this year, which could allow short-term rates to fall further. Next week's survey should reflect the Fed's recent actions in capturing a lower 1-year ARM rate."

Two-thirds of the mortgage experts surveyed by BankRate.com expect for rates to decline further over the next 30-45 days. BankRate.com's financial analyst, Greg McBride, also believes that rates will head lower. "The next couple of weeks present a good opportunity to lock in at record low levels," McBride said.

Freddie's Van Order expects that long-term mortgage rates will remain around 6.5 percent through the end of the year.

Applications for refinance mortgages shot up almost twenty-five percent from the prior week, according to the Mortgage Bankers Association of America (MBA). Total loan applications -- including applications for purchase-money mortgages -- rose twenty-three percent.

With rates lower than any time in a generation, a whole new group of borrowers will be able to refinance, the Wall Street Journal reported a Credit Suisse First Boston economist as saying. Even small declines in rates from here on out will "create very large movements in the number of mortgages being refinanced," Paddy Jilek was quoted as saying.

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