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Thirty-Year Loan Crashes Into New Low as Europe Scrambles

The crisis of confidence in Europe once again drove mortgage rates to record lows this week, with real estate Web site ""Zillow"":http://www.zillow.com/ reporting that the 30-year fixed-rate mortgage slammed into 3.56 percent, the lowest it has recorded since it started surveying rates.

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Zillow said that the 30-year loan initially rose to 3.62 percent this week after euro zone authorities decided to bail out Spain with favorable terms.

The rate for a 15-year loan hovered at 2.95 percent, while interest rates for 5-year and 1-year adjustable-rate mortgages (ARMs) averaged 2.68 percent.

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""Despite a brief spike in rates driven by the Spanish bailout, interest rates returned quickly to record low levels,"" ""Erin Lantz"":http://www.zillow.com/profile/Erin-Lantz/, director of Zillow Mortgage Marketplace, said in a statement.

She said the company expects mortgage rates to ""remain fairly stable,"" with ""some rate movement"" feasible if winds change in Greece's election this weekend or in June, when European Union leaders will meet again to find more sustainable solutions to the crisis.

The currency bloc decided to shore up debt-saddled Spain this week with an infusion of $125 billion, or 100 billion euros, in order to help the Mediterranean country secure relief for fledgling Spanish financial institutions.

That bailout may now be in doubt, however, with ""_Reuters_"":http://www.reuters.com/article/2012/06/12/us-eurozone-spain-idUSBRE85B0WG20120612 reporting that investors responded Tuesday by helping drive 10-year yields for Spain to their highest levels since the euro currency went live.

Many analysts fear a breakup of the euro currency or redefinition of terms and conditions that allow countries to participate in the euro zone.

A disorderly default in Greece could force the country to leave the euro ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô an event that they say would drive mortgage rates even lower but slash exports jobs and tip financial markets around the world.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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