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Mortgage Rates Smash New Records on Europe Debt Fears

A rush by overseas investors to the safe haven of U.S. Treasury debt helped whittle away at yields and force mortgage rates to all-time lows, a short-term boon to creditworthy homebuyers. With the 30-year benchmark loan smashing new records, analysts for mortgage giant ""Freddie Mac"":http://www.freddiemac.com/ and finance Web site ""Bankrate.com"":http://www.bankrate.com/ chalked up the favorable rates to a wobbly Greece and unsettled concerns over euro zone markets.


Bankrate.com and Freddie Mac report the latest mortgage rates each week in separately issued weekly surveys and indices that cull information from the nation's financial institutions.

The GSE found rates for 30-year loans lingering around 60-year record lows, failing to buck 4.12 percent from last week by falling to 4.09 percent this week. Bankrate.com also offered new lows for the 30-year loan, reporting that rates collapsed to 4.32 percent this week from 4.35 percent last week.

For 15-year fixed-rate mortgages, Bankrate.com found rates falling to 3.44 percent this week, while Freddie beheld a plunge by rates to 3.30 percent over the same period.

The GSE and finance Web site disagreed over adjustable-rate mortgages (ARMs), for which Freddie noted an increase, reporting a rise in rates for 5-years to 2.99 percent this week from 2.96 percent last week. Bankrate.com signaled a fallback in 7-year and 10-year ARMs to 3.2 percent and 3.76 percent, respectively, nodding at lows across the board.


Freddie and Bankrate.com also acknowledged lows for the 1-year ARM and 30-year jumbo mortgage, finding plunges in rates to 2.81 percent and 4.83 percent, respectively.

Commenting on the figures, Frank Nothaft, VP and chief economist with Freddie, who more recently spoke to _MReport_ for a ""live interview"":https://themreport.com/videos/daily-webcast-for-09-14-2011, said that ""[c]ontinued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week."" He added that ""homeowners could shave almost $1,715 a year in interest payments on a $200,000 loan"" by refinancing at current rates available for the 30-year fixed-rate loan.

Adding its two cents, Bankrate.com likewise ascribed consecutive record lows for mortgage rates to ""ongoing debt issues on the other side of the Atlantic"" in a ""statement"":http://phx.corporate-ir.net/phoenix.zhtml?c=61502&p=irol-newsArticle&ID=1607131&highlight.

The finance Web site said that the ""nervousness about whether Europe's debt problems will mushroom into a widespread financial panic has helped bring both yields and mortgage rates lower.""

Record lows for mortgage rates arrive amid a frenzy of concern by investors and governments worldwide over the imminent debt crises in member-state countries belonging to the European Union.

""CNN"":http://edition.cnn.com/ producer Sarah Sultoon ""outlined"":http://business.blogs.cnn.com/2011/09/15/greece-is-heading-toward-default-but-what-kind/ worries over Greece, the lagging member-state that investors, officials, and market watchers fear will default on its debts without notice.

She wrote that a reaction by the markets to such a debt-default scenario and resulting losses for financial institutions ""could be as bad as when Lehman Brothers collapsed in 2008.""

In previous stories for _MReport_, analysts alternately ""said"":https://themreport.com/articles/how-european-debt-debacle-could-stifle-housing-2011-08-12 that the European crisis could either make or break a U.S. housing recovery, while others ""underscored"":https://themreport.com/articles/global-shocks-unlikely-to-directly-crimp-housing-2011-09-07 the robustness of the American economy and its ability to weather overseas defaults.

Stocks and shares for several U.S. mortgage giants more recently ""fell"":https://themreport.com/articles/stocks-for-mortgage-banks-fall-on-euro-zone-fears-2011-09-09 on fears that Greece would default.

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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