Mortgage Rates Hit Record Low Again

As prices continue to drop and foreclosures remain dangerously high, mortgage rates set a new record low for the fourth time in the last five weeks. The average rate for a 30 year fixed rate mortgage was 4.56 percent last week, down from 4.57 percent the previous week. It's the lowest average 30 year rate since 1971, when numbers were first tracked.

The last time rates were this low was during the 50s, when most mortgages were based on 20 or 25 year terms. The average rate for a 15 year fixed rate mortgage dropped to 4.03 percent from 4.06 percent. It's the lowest reported average on records that date back to 1991. Rates have dropped steadily since the spring. Investors concerned over the European debt crisis have been shifting capital to safer Treasury bonds, driving down their yields, which are used as a barometer for interest rates.

The low rates have yet to make a significant impact in sales or refinancing activity, however. Sales of previously occupied homes fell once again in June and experts predict the trend will continue through the rest of the year. On Thursday, it was reported that sales had dropped just over five percent to a seasonally adjusted annual rate of 5.36 million.

The housing market had begun to show signs of stabilizing earlier in the year but the recovery stalled when the federal tax credits for homebuyers expired at the end of April. Since then, sales have dropped significantly, consumer confidence has fallen, and homebuilder confidence continues to fall. The lower mortgage rates, by themselves, are not expected to provide relief to the struggling market. Since rates have remained at or near record lows for over a year, those likely to be swayed by the rates have likely already bought or refinanced. Those who haven't would probably not qualify, anyway, because of questionable credit, underwater mortgages, or unemployment.

Mortgage rates can fluctuate greatly, even from the same lender within a single day. The average rate for a 5 year adjustable last week was 3.80 percent, down from 3.86 percent a week ago. The average one year adjustable, meanwhile, went from 3.75 percent to 3.71 percent.

Ruth Mills specializes in the buying and selling of La Jolla homes, La Jolla condos, and Coronado real estate. She began her real estate career in La Jolla in 1976 and has continued to be one of the areas top agents year after year.