Global economic woes push fixed interest mortgage rates to new record lows

fallingrates

Continued economic clouds at home, the Eurozone slipping back into recession and employment fallout from Superstorm Sandy helped push interest rates to new record lows.

The average rate on the 30-year fixed-rate mortgage (FRM) was 3.34 percent, with an average 0.7 point, a new record low. It was down from 3.40 percent last week, and down from 4 percent a year ago.

The previous record low for the 30-year fixed, was set the week of October 4, when it averaged 3.36 percent.

Economic turmoil at home and abroad

The U.S. Consumer Price Index was up 2.2 percent on the year ending in October, with the largest annual jump in energy prices and the largest monthly jump in the cost of shelter since March 2008, according to the Bureau of Labor Statistics.

As prices rose, earning fell and joblessness worsened.

The bureau also reported real average hourly earnings fell 0.7 percent on the year, ending in October. Since reaching a peak in October 2010, real average weekly earnings is down 1.8 percent.

The Department of Labor said the 78,000 Americans who filed unemployment insurance claims the week ending Nov. 10 was more than expected and due to Superstorm Sandy’s impact on the job market. The current 439,000 applications for jobless benefits is the most since April 2011.

“Meanwhile, the core producer price index fell 0.2 percent in October,” said Frank Nothaft, vice president and chief economist of Freddie Mac.

More bad news from abroad, the Eurozone’s economy contracted by 0.1 percent in the third quarter, compared to the second quarter, as economies in Germany and the Netherlands suffered most, according to Eurostat, the EU’s economic watch office. The recessionary contraction cuts into U.S. exports to the region.

The average interest rate on the 15-year FRM came in at 2.65 percent, with an average 0.7 point, another new record low and down from 2.69 percent last week. A year ago, the 15-year FRM averaged 3.31 percent. The rate’s last record low was set the week of October 18, when it averaged 2.66 percent.

The average interest rate on 5-year Treasury-indexed, hybrid adjustable rate mortgage (ARM) was 2.74 percent this week, with an average 0.6 point. It was up from last week’s average 2.73 percent and down from 2.97 percent a year ago.

Finally, for the week ending Nov. 15, Freddie Mac reported the 1-year Treasury-indexed ARM averaged 2.55 percent, with an average 0.3 point, down from 2.59 percent last week, and down from 2.98 percent a year ago.

About the author

DeadlineNews.Com's Interest Rate Writer Corbin Perkins is an intern from Leigh High School. Contact him at CorbinPerkins@DeadlineNews.Com.

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