UPDATE 1-US mortgage rates slide to new lows-Freddie Mac

(Adds quotes, background, details from survey)

By Julie Haviv

NEW YORK, July 22 (BestGrowthStock) – U.S. 30- and 15-year mortgage
rates fell to fresh lows in the past week amid concerns about
the economy, according to a survey released on Thursday by
Freddie Mac, the second-largest U.S. mortgage finance company.

Rock bottom mortgage rates offer a glimmer of hope for a
housing market that has been struggling to gain traction since
the expiration of popular home buyer tax credits several months
ago.

Interest rates on U.S. 30-year fixed-rate mortgages, the
most widely used loan, averaged 4.56 percent for the week ended
July 22, down from the previous week’s 4.57 percent and its
year-ago level of 5.20 percent, according to the survey.

Freddie Mac started the survey in April 1971.

Meanwhile, 15-year fixed-rate mortgages averaged 4.03
percent, down from 4.06 percent last week, the lowest since
Freddie Mac began surveying this type of loan in 1991.

“The decline in mortgages rates over the past few weeks
echoes the recent signs of weakening confidence in the strength
of the economy, particularly the housing and consumer sectors,”
Frank Nothaft, Freddie Mac vice president and chief economist,
said in a statement.

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

Home sales have fallen by the wayside since the expiration
of government tax credits. The National Association of Realtors
on Thursday said sales of U.S. existing homes fell to a
three-month low in June.

To take advantage of the tax credits, buyers had to sign
purchase contracts by April 30. Contracts originally had to
close by June 30, but that was extended another three months.

Despite record low mortgage rates, the housing market
remains highly vulnerable, with a flood of foreclosures in the
pipeline and high unemployment seen weighing heavily.

“Several factors drive a home purchase decision,” said
Robert Grosser, president of Luxury Mortgage in Stamford,
Connecticut. “Job stability, available funds for a down
payment, and qualifying under today’s more stringent credit
requirements are at the top of the list.”

LOW RATES, HIGHER DEMAND

With interest rates dropping to their lowest since Freddie
Mac started the survey, home loan refinancing activity should
continue to show strength and demand for loans to purchase a
home may gain traction.

The Mortgage Bankers Association said on Wednesday that
mortgage applications jumped last week as demand for loans to
purchase homes rose for the first time in five weeks. For
details double-click on [ID:nNLLKIE69U].

“Confidence is slowly returning which will cause the
purchase market to accelerate further in time,” said Alan
Rosenbaum, president of Guardhill Financial, a New York-based
mortgage banker and brokerage company.

“Employment has stabilized in our area which is encouraging
new purchase business,” he said.

Freddie Mac said the rate on the 5/1 ARM, set at a fixed
rate for five years and adjustable each following year, was
3.79 percent, down from 3.85 percent last week. One-year
adjustable-rate mortgages (ARMs) were 3.70 percent, down from
3.74 percent last week. For details double-click on
[ID:nWALMIE6DZ].

A year ago, 15-year mortgages averaged 4.68 percent, the
one-year ARM was 4.77 percent and the 5/1 ARM 4.74 percent.

Investment Basics

UPDATE 1-US mortgage rates slide to new lows-Freddie Mac