Interest rates hit historical levels yet again last week, with the 30-year FRM hitting 3.79 percent.
Freddie Mac yesterday released the latest results of its Primary Mortgage Market Survey, and it found what by now has become common – that average fixed mortgage rates hit record lows last week.
The 30-year FRM averaged just 3.79 for the week ending May 17, a four basis point decline from the 3.83 percent of the week prior and a substantial drop from the 4.61 percent from last year.
Emilio Palomo, a Realtor with Riteway Properties and the Miami chair of the Master Brokers Forum, an organization of South Florida’s top real estate professionals, said the low rates have been unprecedented.
“I would never have imagined rates would have been lower than 6 percent in my lifetime,” Palomo said, who has been selling real estate since the ’70s. “I was selling homes when Carter was president, and rates were 18 percent.”
“I think it’s great,” Palomo continued, adding the incredible reach that real estate transactions have. Not only, he explained, does an agent profit from the commissions of a home sale – the inspector and appraiser are also provided work; the bank is provided business on the loan, as is the loan officer that processes it; new appliances, kitchenware, furniture and other household items are purchased to furnish the home – suddenly, nearly ever sector of the economy has been impacted by the transaction.
The 3.79 rate, though, is not nearly the lowest Palomo has seen. He is currently refinancing his property, and he qualified for a 5-year FRM at 2.5 percent.
“It’s unbelievable,” he said.
Frank Nothaft, the vice president and chief economist of Freddie Mac, said economic factors oversees played a big part in the declining rates, which occurred despite positive economic news at home.
“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,” Nothaft said. “For instance, industrial production rose 1.1 percent in April – the largest gain since December 2010 – and consumer sentiment in May rose to its highest reading since January 2008, according to the University of Michigan.”
The 15-year FRM averaged 3.04 percent, down just one basis point from the week before but 75 basis points from last year, when it averaged 3.80 percent. The 5-year ARM, by comparison, averaged 2.83 percent, up by two basis points from the week before but still down 67 basis points from last year. The 1-year ARM, at 2.78 percent, was up by five basis points but down 27 from last year.