Concerns Over European Debt Crisis Drives Down U.S. Mortgage Rates

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Based on Freddie Mac's latest Primary Mortgage Market Survey (PMMS), mortgage rates declined sharply this week as investors rushed to U.S. Treasury bonds amid concerns over the European debt market. The 30-year fixed at 4.00 percent marks the second lowest reading since it hit a record 3.94 percent in the October 6, 2011 PMMS, the lowest in history.

Frank Nothaft, vice president and chief economist of Freddie Mac told the World Property Channel, "Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates. Meanwhile, on the home front, the U.S. economy continued its gradual recovery. The Bureau of Economic Analysis reported the economy grew 2.5 percent in the third quarter, the strongest pace in a year, led by a surge in consumer expenditures. In addition, consumer spending rose 0.6 percent in September, nearly threefold that of August. Finally, consumer sentiment, as measured by the Thomson Reuters/University of Michigan index, rose for the second month in a row in October to its highest reading since July."

The 30-year fixed-rate mortgage (FRM) averaged 4.00 percent with an average 0.7 point for the week ending November 3, 2011, down from last week when it averaged 4.10 percent. Last year at this time, the 30-year FRM averaged 4.24 percent.

15-year FRM this week averaged 3.31 percent with an average 0.7 point, down from last week when it averaged 3.38 percent. A year ago at this time, the 15-year FRM averaged 3.63 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it averaged 3.08 percent. A year ago, the 5-year ARM averaged 3.39 percent.

1-year Treasury-indexed ARM averaged 2.88 percent this week with an average 0.6 point, down from last week when it averaged 2.90 percent. At this time last year, the 1-year ARM averaged 3.26 percent.

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