Mortgage rates reached an all-time low for the second consecutive week amid the Federal Reserve’s purchase of securities and “indicators of a weakening economy,” government-sponsored Freddie Mac, said Thursday morning.
The weekly average for the 30-year fixed-rate mortgage in the U.S. fell to 3.36 percent for the week ending Oct. 4, down from 3.4 percent last week and 3.94 percent a year ago.
The 15-year fixed-rate mortgage dropped to 2.69 percent from 2.73 percent last week and 3.26 percent a year ago.
Last month, the Federal Reserve announced a stimulus measure of quantitative easing, saying it anticipates low interest rates through mid-2015.
“Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy,” said Frank Nothaft, vice president and chief economist of Freddie Mac, in a statement.
Those economic indicators included a lower-than-expected revision of growth in GDP, down to 1.3 percent for the second quarter.
Also, personal incomes rose only 0.1 percent in August while the increase for July was revised lower.
Pending home sales in August fell 2.6 percent, “well below the market consensus forecast of a slight increase,” Nothaft said.
The low rates are causing a burst in refinancing applications. The Mortgage Bankers Association announced Wednesday that refinancing applications are at their highest level since April 2009.
But it’s still hard to get a loan — 40 percent of all refinancing applications fall apart, according to the Mortgage Bankers Association. Many borrowers do not qualify for new loans because of credit scores or income. Banks are reluctant to lend because they are worried they may be forced to buy back bad loans from Fannie Mae and Freddie Mac.
With reporting by Zunaira Zaki.