30-year mortgage rates slip below 4%

Sandy Smith's picture

If there's anything keeping would-be home buyers out of the market, clearly today's mortgage rates aren't it, for the record lows keep falling. Today, a significant psychological barrier has been crossed with the first major survey to report average 30-year mortgage rates below 4 percent.

That survey is the Freddie Mac Primary Mortgage Market Survey (PMMS) for the week ending Oct. 6. The average rate for a 30-year fixed-rate mortgage fell below 4% for the first time in survey history, dropping 7 basis points from the previous week to 3.94% with an average 0.8 discount and origination fee points. The average 15-year fixed mortgage rate also set another new all-time low, falling 2 points to 3.26% with an average 0.8 points. Five-year ARMs also fell, shedding 6 points to settle at 2.96% with an average 0.6 point, but one-year ARMs rose 12 points to 2.95% with an average 0.5 points.

Freddie Mac Vice President and Chief Economist Frank Nothaft said that the movements are the product of the Federal Reserve's program of replacing short-term debt with long-term debt in order to drive long-term interest rates down. "Average 30-year conventional fixed mortgage rates fell below 4 percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew. Average 15-year fixed rates fell to a record low in the PMMS as well. Interest rates for 1-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs," he said.

As for why these record low rates have not triggered a surge in home buying to match that in refinancing, Nothaft, like most observers, pegged that on the persistently weak economy. "In his testimony to Congress's Joint Economic Committee on Tuesday, Federal Reserve Chairman Bernanke said the recovery is close to 'faltering' and stressed the need for lawmakers to act," he said. Monthly employment and unemployment figures due out this morning are expected to back up Bernanke's statement, but the current climate on Capitol Hill is not conducive to any major efforts to extend unemployment relief or provide economic stimulus.

As the continued slump in housing is a major contributor to the weak economy, moves to stimulate home buying could help reverse the trend. At a forum on Tuesday, Ron Phipps, head of the National Association of Realtors, repeated his trade group's frequently made call for lenders and regulators to dial back stricter regulations and underwriting standards that have shut some qualified buyers out of the mortgage market and cautioned against any moves to reduce or eliminate the mortgage interest deduction. NAR Chief Economist Lawrence Yun, who also participated in the forum, said, “Reducing or eliminating the MID is a de facto tax increase on homeowners, who already pay 80 to 90 percent of U.S. federal income tax. And middle-class families would be among the hardest hit; 65 percent of families who claim the MID earn less than $100,000 per year.”

Today's mortgage rates mostly higher on overnight surveys

While the weekly surveys this week have once again all pointed downward, the daily surveys continue to produce mixed results. Today, those surveys mostly pointed up for the day and in mixed directions for the week.

Yesterday's average afternoon mortgage rates on the Zillow.com National Mortgage Marketplace, with changes from Wednesday and one week ago, are: 30-year fixed, 3.84% (+5 points, -4 points); 15-year fixed, 3.22% (+3 points, +4 points); 5-year ARM, 2.73% (+9 points, -1 point). Today's real-time rates as of 8 a.m., with changes from yesterday morning and afternoon, are: 30-year fixed, 3.87% (+7 points, +3 points); 15-year fixed, 3.24% (+6 points, +2 points); 5-year ARM, 2.86% (+35 points, +13 points).

This morning's average mortgage rates on the Bankrate.com overnight survey, with changes from yesterday and one week ago, are: 30-year fixed, 4.04% (+1 point, -3 points); 15-year fixed, 3.38% (unchanged, +2 points); 5-year ARM, 3.02% (+2 points, +1 point); 30-year fixed refinance loan, 4.15% (+2 points, -3 points).

One basis point equals one hundredth of a percentage point. Rates reported in this article assume good credit (FICO score of 650 or higher) and a 20% down payment. Morning rates from Zillow.com are for loans for the most creditworthy borrowers (FICO score of 720 or higher). One discount point represents one percent of the total value of a mortgage, paid as interest up front.


I knew this was coming. One day we would see 30 year fixed mortgage rates below 4 percent and even lower. I expect to see the home loan rates even below 3.5 percent. This will really boost the economy.

Add new comment