Mortgage rates match all-time low

The Primary Mortgage Market Survey by Freddie Mac today reported that rates for fixed-rate mortgages are again at historic lows, with 30-year fixed rates sliding to match the all-time low at 3.94 percent. Five-year adjustable-rate mortgages also hit an all-time low at 2.86 percent.

Average mortgage rates released by Freddie Mac as part of the survey included four products:

• 30-year fixed-rate mortgage: 3.94 percent, down from 4.83 percent a year ago
• 15-year fixed-rate mortgage: 3.21 percent, down from 4.17 percent a year ago
• Five-year Treasury-indexed hybrid adjustable-rate mortgage: 2.86 percent, down from 3.77 percent a year ago
• One-year Treasury-indexed adjustable-rate mortgage: 2.81 percent, down from 3.35 percent a year ago

Mortgage rates for 30-year fixed rate mortgages matched the previous all-time record low for these loans. Fifteen-year fixed-rate mortgages hit a new record, dropping below the previous low set on October 6.

One-year adjustable-rate mortgages were the only mortgage product to see a slight increase from the previous week, going from 2.80 percent to 2.81 percent.

Depressed housing market continues

Declining interest rates led to a 4.1 percent increase in mortgage applications during the first full week of December, according to the Mortgage Bankers Association. However, property sellers hoping for a rush of buyers will be disappointed. That increase was driven largely by existing homeowners. Nearly 80 percent of the mortgage applications were submitted by those hoping to refinance at near-historic rates.

However, some homeowners may find falling property values and lost equity make it difficult to refinance. According to real estate website Zillow, home values have dropped nearly 24 percent since their peak in May 2007.

"Over the first nine months of 2011, households lost almost $400 billion in property values, which contributed to a $1.4 trillion reduction in overall net worth," said Frank Nothaft, vice president and chief economist for Freddie Mac. "In addition, serious delinquency rates on mortgages increased slightly between June 30 and September 30 of the year, breaking a six-quarter consecutive decline, according to the Mortgage Bankers Association."

Zillow reports housing depreciation appears to be stabilizing, suggesting the market may be bottoming out. In October 2011, home values declined overall by 0.3 percent while 39 of 156 metro areas saw an increase in their property values. Still, that is likely of little comfort to the nearly 29 percent of homeowners who are "underwater" with a mortgage and negative equity.

The original article can be found at Money-Rates.com:Mortgage rates match all-time low