Mortgage rates fell again, smashing previous record lows, according to a regular weekly release from mortgage giant Freddie Mac.
The rate for a 30-year, fixed-rate loan, the most popular mortgage product, dropped to 3.62% from 3.66% last week. The rate has matched or hit a new low for 10 of the past 11 weeks, Freddie Mac said. Meanwhile, the 15-year fixed rate fell to 2.89%, down from 2.94%.
"Recent economic data releases of less consumer spending and a contraction in the manufacturing industry drove long-term Treasury bond yields lower over the week, and allowed fixed mortgage rates to hit new all-time record lows," said Frank Nothaft, Freddie Mac's chief economist.
The 15-year fixed-rate mortgage is popular among homeowners who are seeking to refinance or to trade-up and minimize their total interest payments. At the current rate, a borrower financing $200,000 would pay $1,370 a month and spend a total of just under $47,000 in interest over the 15-year span of the mortgage.
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Buyers who want to minimize their monthly payments by opting for a 30-year loan would have payments of just $911 a month on a $200,000 loan. But they would pay $128,000 in interest over the life of the loan.
One year ago, the same 30-year loan would have carried a 4.6% rate and cost about $100 more a month.
Rates will probably stay low for a while, according to Keith Gumbinger of HSH.com, a mortgage information provider.
He pointed out that the spread between Treasury yields and interest rates is still wider than usual, with a full two percentage points separating them. More typical is a spread of about 1.7 percentage points.
That means mortgage rates could have even further to fall if Treasury yields drop or even hold steady.
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