RealEstateEconomyWatch.com

Borrowing costs for households seeking to purchase a home or refinance their mortgage loan fell to near historic low levels during the week ending October 8 according to a well known mortgage market survey released on Thursday.

The 30-year fixed-rate mortgage averaged 4.87 percent for the week of October 8, down from a 4.94 percent rate posted one week earlier according to Freddie Mac’s weekly primary mortgage market survey.  The long-term mortgage rate is almost 1 percentage lower than the 5.94 percent 30-year mortgage posted a year ago. The popular mortgage rate is now comfortably below the 5 percent watermark and is approaching record territory.

The survey also reported that the 15-year fixed-rate mortgage averaged 4.33 percent for the current week down from last week when it averaged 4.36 percent. This is the lowest the 15-year fixed-rate mortgage has been since Freddie Mac began following it in 1991.  The 1-year adjustable-rate mortgage rose slightly to 4.53 percent in this week’s survey compared to a 4.49 percent rate in last week’s survey.

“Long term mortgage rates eased further this week,” said Frank Nothaft, Freddie Mac’s Chief Economist. “Interest rates for 30-year fixed-rate loans were the lowest since mid-May.” Historically low mortgage rates are keeping homes affordable and are enticing first-time homebuyers to purchase homes. Affordability measures have been hovering near record levels all year long.

It is clear that very low mortgage rates are driving mortgage demand. A weekly survey conducted by the Mortgage Bankers Association released on Wednesday, reported that in the week ending October 2, mortgage applications climbed to a 19-week high. More importantly for future home sales, applications for home purchases were at the highest pace since the beginning of the year.

This week’s mortgage rate survey is further evidence that the Federal Reserve continues to apply downward pressure on interest rates. In its September 23rd policy statement, the central bank indicated that it plans to keep its benchmark interest rate exceptionally low for an extended period. This bodes well for the direction of future mortgage rates and the mortgage and housing industries.