Low mortgage rates shouldnt come as a surprise as average interest rates for long-term mortgages set record lows in the week ending Sept. 2, the U.S. Federal Home Loan Mortgage Corp. said Thursday.
Freddie Mac said modest inflation expectations contributed to the drop in interest rates for 15-year and 30-year fixed rate mortgages, which have numerous record lows through the summer.
The 12-month price growth of core personal expenditures remained at 1.4 percent in July, which kept overall inflation expectations well at bay, said Freddie Mac Deputy Chief Economist Amy Crews Cutts.
In the latest weekly survey, Freddie Mac said interest rates for 30-year, fixed-rate contracts dropped from 4.36 percent with an average of 0.7 points, to 4.32 percent, a 39-year low.
Average interest rates for 15-year, fixed-rate mortgages fell from 3.86 percent to 3.83 percent. Points for 15-year mortgages averaged 0.6 during the week.
For anyone under the age of 57, mortgage rates are at the lowest point ever in their lifetime.
This fact isn't lost on a growing number of homeowners who have started a new wave of refinancing.
The Mortgage Bankers Association reported this month that refinancing applications are up 26 percent during the past four weeks and account for about 82 percent of all mortgage applications. Not since May 2009 has the number of refinancing applications been higher.
"Rates continue to hit new lows because of the weak U.S. economic recovery and the concern that it could fizzle altogether," says Greg McBride, senior financial analyst with Bankrate.com.
But McBride and others advise against waiting to refinance in hopes that rates will drop further. If they do keep falling, that means the economy is getting even more anemic.
