Average rate on mortgages drops to 3.63%…lowest since May 2013…Will this continue?

Average long-­term U.S. mortgage rates fell for the fourth straight week, with the 30-­year rate again marking its lowest level since May 2013.

The nationwide average for a 30-­year mortgage slid to 3.63% this week from 3.66% last week. The average for a 15­year mortgage, a popular choice for people who are refinancing, dipped below 3% to 2.98%.

The ongoing decline in rates lured a crop of prospective buyers, as applications for mortgages marked their biggest weekly gain last week in over six years.

Applications jumped 49.1%, the biggest weekly increase since November 2008, according to the Mortgage Bankers Association.

Worries about economic troubles in Europe and Asia have sent mortgage rates plunging despite positive indicators regarding the domestic economy with rising consumer confidence and increases in wages. That strength contrasts with a European economy so fragile that the European Central Bank is expected later to launch a bond­-buying program similar to the stimulus the Federal Reserve employed here as an extraordinary reaction to the Great Recession.

With once ­booming emerging economies from Brazil to China now slowing as well, spooked investors around the world are seeking the haven of ultra­-safe government bonds. The effective annual interest rate on 10-­year securities issued by Germany and Japan has fallen well below 1%, and the yield on 10­-year U.S. Treasury notes dropped below 2% for the first time in three months. With bond investors accepting lower yields on these securities and on the Ginnie Mae bonds backed by Federal Housing Administration and Veterans Administration home loans, mortgage bankers can lower the rates charged to consumers.

Global uncertainty continues to be the friend of the American home-buyer and it should stay that way through most of 2015. Once the Europeon economy starts to stabilize expect rates to begin the climb that has been expected since early last year.

Sources: LA Times, Housing Wire, Fortune

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