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Mortgage Rates Fall to New Record Lows as Greece Titters

Interest rates for mortgage loans saw new, all-time lows this week as investors fled debt crises in Europe.

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""Freddie Mac"":http://www.freddiemac.com/ found the 30-year fixed-rate mortgage sliding to 3.79 percent, down from 3.83 percent last week and a far cry from 4.61 percent last year. The 15-year loan fell from 3.05 percent to 3.04 percent.

Adjustable-rate mortgages (ARMs) went up. The 5-year variable loan averaged 2.83 percent this week, a few percentage points up from 2.81 percent, while the 1-year climbed to 2.78 percent.

""The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,"" ""Frank Nothaft"":http://www.freddiemac.com/bios/exec/nothaft.html, chief economist for Freddie, said in a statement.

He cited a gain for industrial production by 1.1 percent in April, the largest such since December 2010, and a rise for consumer sentiment since January 2008, according to the University of Michigan.

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Even so, analysts suggest that ongoing crises of debt and confidence in Europe could tilt the U.S. economy back toward danger by slashing jobs in the exports industry and exposing systemically important financial institutions to a credit crunch.

A combination of low economic growth and high public debt led to ousters in recent elections across Europe, driving down the worth of the euro and damaging investor confidence in the European Union. Newly elected French President Francois Hollande unseated incumbent Nicholas Sarkozy.

An antiestablishment mood in Greece also propelled leftist parties like the Coalition of the Radical Left to power last week, ousting more independent political parties and further soiling interest in tough austerity measures from Germany.

The uncertainty in Greece largely pushed investors back to the safe haven of U.S. Treasury debt, driving down yields along with mortgage rates.

""The ongoing European debt crisis is producing another flight to quality, where investors gravitate to safe-haven investments such as U.S. Treasuries,"" says ""Greg McBride"":http://www.bankrate.com/blogs/federal-reserve/about-greg-mcbride-cfa.aspx, a senior financial analyst with ""Bankrate.com"":http://www.bankrate.com/. ""As long as uncertainty prevails, mortgage rates are likely to remain at these ultra-low levels.""

The finance Web site likewise saw new record lows for mortgage rates, with the 30-year fixed-rate mortgage dropping below 4 percent for the first time by arriving at 3.97 percent. The average 15-year loan stayed unchanged at 3.2 percent.

Five-year ARMs went up to 3 percent, while 1-year variable loans fell to 3.11 percent.

With mortgage rates largely falling this week, mortgage applications rose, according to the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm, which recorded a 9.2 percent increase last week.

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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