The average 30-year fixed-rate mortgage dropped this week to tie its all-time record at 4.32 percent, according to Freddie Mac.
Last week, the average rate was 4.37 percent and a year ago the average rate was 4.94 percent.
The 15-year, fixed-rate mortgage hit an all-time low of 3.75 percent. That was down from last week’s average rate of 3.82 percent. Last year at this time, the average rate was 4.36 percent.
“Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week,” Frank Nothaft, vice president and chief economist of Freddie Mac, said in a statement. “The September Consumer Confidence Index by the Conference Board fell to the lowest level since February of this year.
Might we see a 0 % mortgage in the future ?
Well, if rates continue to drop, as some in the mortgage industry suggest they may, mortgage rates could inch in the direction of 0%. The Federal Reserve’s recent indication that it is willing to take extraordinary steps to keep the economy growing and continued concerns of deflation may also put pressure on mortgage rates.
"So long as the Fed allows the word ‘deflation’ to get bandied about, mortgage rates will ease lower," said Dan Green, a loan officer with Waterstone Mortgage in Cincinnati.
How much lower?
"In theory, the only stopping point there is is 0%—that’s where all nominal interest rates have to stop," said Mike Larson, real-estate analyst for Weiss Research.
Think about it: 0% financing has long worked as an incentive in the auto industry. And home builders have been known to pay down mortgage rates for their buyers, so these days it wouldn’t be unheard-of for them to entice people with a 2% or 3% mortgage rate, at least for a period of time.
That isn’t to say mortgage rates couldn’t drop from their levels now. After all, two years ago, few people would have thought a 4% mortgage was possible.
Rates on 30-year fixed-rate mortgages have dropped more than a percentage point since the end of the recession in June 2009.
This summer, the average rate on the 30-year loan broke record low after record low.
Since 1975, fixed-rate mortgage rates have fallen over the 12 months following every recession, with the exception of the 1980 downturn, Freddie Mac chief economist Frank Nothaft said. The 0.7 percentage-point decline from June 2009 to June 2010 was "the largest decline during the first year of recovery over the last six recessions," he said.
We are in an era of historically low mortgage rates, reaching levels not seen in decades. Coupled with four years of home-value declines, homes are more affordable than we’ve seen in years.
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Here are rates being quotes as of Yesterday:
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