UPDATE 1-US 30-yr mortgage rate drops to new record low

(Adds quotes, background, details from survey)

By Julie Haviv

NEW YORK, July 8 (BestGrowthStock) – U.S. 30-year mortgage rates
dropped to a new record low in the past week, according to a
survey released on Thursday by Freddie Mac (FMCC.OB: ), as
concerns mounted about the economic recovery.

Attractive mortgage rates have raised demand for home
refinancing loans in recent weeks. They have failed to increase
appetite for mortgages to purchase a home, a trend that does
not bode well for a housing market that still faces a huge
imbalance between supply and demand.

Rates on 30-year fixed-rate mortgages, the most widely used
loan, averaged 4.57 percent for the week ended July 8, down
from the previous week’s 4.58 percent and 5.20 percent a year
earlier, according to the survey, which started in April 1971.

“With mortgage rates falling to historic lows, refinance
activity has been strong over the past three months,” Frank
Nothaft, Freddie Mac vice president and chief economist, said
in a statement.

While low rates and high affordability have helped the
housing market gain ground, it has struggled in recent months
given stubbornly high unemployment and mounting foreclosures.

Home loan refinancing, however, puts more cash into
consumers’ hands to funnel into the U.S. economy and could help
many homeowners avoid foreclosure.

Freddie Mac is the second-largest U.S. mortgage finance
company.

Freddie Mac said the 15-year fixed-rate mortgage averaged
4.07 percent, up from 4.04 percent last week.

Mortgage rates are linked to yields on Treasuries and
yields on mortgage-backed securities.

David Adamo, CEO of Luxury Mortgage in Stamford,
Connecticut, said consumers are wary about making a home
purchase despite low mortgage rates,

“Even with historically low interest rates and the
affordability factor for housing at all time highs there seems
to still be an air of caution for many would be buyers,” he
said.

“In addition, many homeowners have been discouraged from
refinancing, particularly for jumbo loans,” he said.

LOW RATES, MIXED DEMAND

The rate on the 5/1 ARM, set at a fixed rate for five years
and adjustable each following year, was 3.75 percent, down from
3.79 percent last week, and the lowest since Freddie Mac
started tracking the mortgage type in 2005. For details
double-click on [ID:nWAL8IE6C2].

One-year adjustable-rate mortgages (ARMs) were 3.75
percent, down from 3.80 percent last week.

The Mortgage Bankers Association said on Wednesday that
applications for home refinancing loans surged last week. For
details double-click on [ID:nNLL6IE68D].

A year ago, 15-year mortgages averaged 4.69 percent, the
one-year ARM was 4.82 percent and the 5/1 ARM was 4.82
percent.

(Editing by Andrew Hay)

UPDATE 1-US 30-yr mortgage rate drops to new record low