Mortgage Rates Stay Low as Euro Debt Contagion Spreads

Investors helped keep interest rates for mortgage loans in record-low territory this week, as European Union leaders grappled with lurking debt crises in Spain and Italy.

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Real estate Web site ""Zillow"":http://www.zillow.com/ recorded the 30-year fixed-rate mortgage hovered at 3.6 percent, just above an all-time low of 3.59 percent set two weeks before.

Rates for 15-year loans averaged 2.91 percent, while those for 5-year and 1-year

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adjustable-rate mortgages hovered at 2.54 percent.

Rates for 30-year fixed-rate loans largely fell in most states, climbing only in Illinois, New York, and Washington.

""Mortgage rates fell slightly this week, fueled by concerns that the turmoil in Spain's banking system could worsen the European debt crisis,"" ""Erin Lantz"":http://www.zillow.com/profile/Erin-Lantz/, director of Zillow Mortgage Marketplace, said in a statement. ""Looking ahead, rate fluctuations will continue to be driven by news from Spain and Greece, in particular Greek elections that will likely determine the country's fate in the eurozone.""

Investors continue to flee from Europe, where a combination of low economic growth and mounting public debt threatens to upend the single-currency bloc.

""_Reuters_"":http://www.reuters.com/article/2012/05/29/eurozone-strategy-commission-idUSL5E8GTCHN20120529 reported that European Commission leaders will meet Wednesday, with expectations high that members will balance calls for fiscal consolidation with growth measures.

Much of the focus will center on economic heavyweights Spain and Italy, even while Greece prepares for another round of parliamentary elections that analysts say could decide whether it stays in the euro zone.