Mortgage Rates Tumble to Record Lows Five Weeks Straight

The 30-year mortgage loan rate fell to an average 3.75 percent on May 31st, according to Freddie Mac's recent Primary Mortgage Market Survey®, the lowest rate since long-term mortgages began in the 1950s. Regional rates vary between 3.70 and 3.75 with fees and points averaging 0.7 to 0.9. 

(source: Freddie Mac)

 

Noteworthy, the 10-year U.S. Treasury bond rate hit a dramatic new record low on Thursday at an unprecedented 1.54 percent, sharply lower than 1.62 percent the day before, beating out the previous mark of 1.55 percent set in November 1945.

 

(source: U.S. Department of the Treasury)

Market watchers predict this is not just a temporary dip. Mortgage rates have been below four percent since December and had been steadily dropping. Projections are for these historic rates to remain low over the coming weeks due to several key economic factors.

So what is driving mortgage rates to such historic lows? Renewed uncertainty about how Europe will resolve its sovereign debt crisis is coupled with a volatile stock market. Investors are scrambling to put their money into secure instruments such as mortgage-backed securities. 

Mortgage rates have dropped steadily tracking the yield on 10-year U.S. Treasury bonds, which are benchmarks for mortgages and corporate bonds. The bond yield fell for nine straight weeks through mid-May, the longest stretch since the late 1990s.

What does this mean for you, the borrower? Unprecedented low rates provide the ideal incentive for first time buyers to enter the housing market, current homeowners to refinance, or relocating families who need to purchase a new home. The window of opportunity is real and timely. Traditionally, summer months herald the peak move season of the year for families, since most schools are out of session and relocation is less disruptive for children.

~~ Linda Ivanov, author