How low can mortgage rates go?
With the record lows in mortgage rates housing starts have risen above industry forecasts for the month of April.
Mortgage rates have continued to fall over the past week, setting record lows for both 30-year and 15-year contracts, mortgage giant Freddie Mac said Thursday.
The 30-year benchmark now stands at 3.79 percent, down from 3.83 percent a week ago, with an average “point” fee of 0.7 percent of the mortgage value. The 15-year fixed rate average fell to 3.04 from 3.05 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,” Freddie Mac chief economist Frank Nothaft said in a statement.
There is some evidence that a low rates combined with a gradually growing U.S. economy are injecting some life into the housing industry.
Housing starts rose to an annualized rate of 717,000 homes in April, well above the market consensus forecast, and construction on one-family homes increased to its strongest pace in three months, Nothaft noted. Homebuilder confidence also rose to its highest reading since January 2008 according to an industry survey.
Rates on adjustable mortgages edged up in the past week but are still historically low at an average 2.83 percent for a five-year ARM.