30-Year Rates Fall Below 5%

Mortgage rates dropped to their 11th straight weekly decline, reaching new record lows, according to Freddie Mac.

Interest rates on 30-year, fixed rate mortgages averaged 4.96 percent this week, down from a previous week's 5.01 percent.
The low rates have caused a spike in home refinancing loans and a welcome relief to cash-strapped home owners facing a slowing economy and rising unemployment rates.

"The fact that interest rates have dropped to a record low is an important development since more affordable home financing could help bring buyers back to the market and prevent some of these foreclosures," says Lawrence White, professor of economics at New York University's Stern School of Business.

Other rates were mixed for the week:

15 year fixed rates: averaged 4.65 percent, up from 4.62 percent.
1-year adjustable rate mortgages: fell slightly averaging 4.89 percent from 4.95 percent last week.
5/1 ARMs: averaged 5.25 percent compared with 5.49 percent last week.

Mortgage rates have continued to drop ever since the Federal Reserve announced a plan in December to buy up $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae—the government-sponsored enterprises.
Freddie Mac started recording mortgages in 1971.

Source: Reuters, Julie Haviv (1/15/09)

Interest Rates rising or falling???

"CONSUMER PRICES HELD STEADY IN JULY The Labor Department reported today that consumer prices remained unchanged in July but indicated inflation worries are still not severe enough to push the Federal Reserve Board to lower interest rates. According to the department's monthly survey of retail prices, the Consumer Price Index (CPI) rose 0.1 percent in July following a 0.2 jump in June, up 2.4 percent from July 2006.
Energy costs are falling after considerable spikes earlier this year, according to the report. Gasoline prices dropped by 1.7 percent in July, helping to hold inflation pressures down to a low simmer and bolstering the government's position that serious economic erosion has yet to warrant the lowering of interest rates." As per today's report from California Association of Realtors.