Average 30-year mortgage rates dropped below 5% for th first time since March. Fears of rates spiking once the Fed ended its mortgage programs seem to be largely unfounded. Much thanks for the drop in rates has to go to Europe. Fears over a disintegration of the Euro have driven investors to Treasuries, driving down yields. Since 30 year mortgage rates are indexed to 10 year Treasury Notes, rates have come down. Rates are now significantly below the year's high of 5.20% set in early April.
What Does This Mean for Homebuyers?
I've been following actual rates, not just averages for a 30-year fixed rate loan in Massachusetts with 0 points ($200,000 loan) for the past four months. Four weeks ago, the rate shot up to 5.125%. It now stands at 4.750%, the same as the previous week.
Other Mortgage Rates
Other mortgage rates also dropped. The average 15-year fixed rate mortgage dropped from 4.35% to 4.32% and is now below its 2010 low of 4.34% in March. The 5 year ARM dropped from 3.86% to 3.73% this week. The 1-year ARM, one of the most volatile didn't live up to its billing this week moving from 4.14% to 4.10%.