Mortgage Rates 8/26/2010 – Yet Another All Time Low

… mortgage rates for the conventional 30 year mortgage have continued their decline to now 4.36%, a historical all time low.

Actually there is also an update for this week from Friddie Mac, according to which rates have already dropped to 4.32%:

Mortgage rates fell to the lowest level in decades for the tenth time in 11 weeks, as investors worried about the economy.

The average rate for a 30-year fixed loan was 4.32 percent this week, down from 4.36 percent last week, mortgage buyer Freddie Mac said Thursday. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on 15-year fixed loan dropped to 3.83 percent from 3.86 percent the previous week. That’s the lowest on records starting in 1991.

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Mortgage Rates at All Time Low

The 30 year mortgage rate has dropped to an average of 4.44% on August 12th 2010:

This is a historical all time low:

Treasury rates are also headed south again, to now 2.61%:

10-year-treasury-2010-august

These are classical phenomenons of deflation.

This is why I wrote about a year and a half ago:

Treasury yields have developed as expected over the past few months. I expect the same direction for mortgage rates: They will continue to drop much much lower than where they are now. As Treasury yields move toward zero, mortgage rates will drop to between 2% and 3%. Whoever thinks of getting in now to get a “great bargain” should think again and wait.

I said in that post that I expect 30 yr mortgage rates to drop to such low levels because I am drawing from examples from the Japanese deflation.

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Mortgage Rates at Record Low

Businessweek writes:

Mortgage giant Freddie Mac (FRE) said on Jan. 15 that rates on 30-year fixed-rate mortgages fell below 5% this week — the lowest level since it began surveying lenders in 1971.

The average rate on a 30-year fixed-rate mortgage was 4.96%, with a fee equal to 0.7% of the mortgage, for the week ending Jan. 15, 2009. It was down from last week when it averaged 5.01 percent and has been falling for 11 straight weeks.

Treasury yields have developed as expected over the past few months. I expect the same direction for mortgage rates: They will continue to drop much much lower than where they are now. As Treasury yields move toward zero, mortgage rates will drop to between 2% and3%. Whoever thinks of getting in now to get a “great bargain” should think again and wait. Please consider phase 8 of the business cycle.

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