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Interest Rates on Home Loans Decline with Fed News

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Just when you though mortgage rates had hit the “rock-bottom”, the Federal Reserve makes a move that caused interest rates to fall to a new record low. In an effort to stimulate the economy and jump-start the ailing housing markets, the Fed announced a new plan centered on buying mortgage securities.

The Outlook for Record Low Mortgage Rates Has Been Extended by the Fed

St. Louis Federal Reserve President James Bullard down-played the effectiveness of the first two rounds in an interview recently. The Fed hopes that keeping pressure on short and long-term rates will have a positive effect on the economy. It’s no secret that lower interest rates could motivate businesses investment in the economy if borrowing is cheap and easy.

According to the SF Gate, the mortgage bond yields fell to a new ridiculous low. Mortgage News Daily reported better pricing and lower rates for buying and home mortgage refinancing. The gap with an average of 5 and 10-year Treasury rates dipped 16 basis points to 98 basis points which is the lowest recorded since 1992.

According to the latest Freddie Mac survey, the average interest rate for a thirty-year mortgage was 3.55% but the news about the Federal Reserve extending another stimulus with QE3 caused rates to tumble today.

The fifteen-year rates were lower by one basis point at 2.85%. The Freddie Mac report also revealed that average borrowers paid on 0.6 of a point for home mortgages on the 15 and 30-year terms. The 10-year rates and hybrid ARMs remained the same as the previous week but the emerging news from the Federal Reserve certainly could force rates lower in the coming week. We also anticipate that conforming and jumbo pricing may improve this week which cause another surge in refinance applications.

Check the today’s rates now:

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