For the third week in a row, the fall in mortgage rates show how far the financial markets are being affected by the consistently weakening economy.
An average of 6.04 percent was posted this week by the fixed rate 30 year mortgages as reported by one of the mortgage finance giants Freddie Mac. Last week’s average was 6.14 percent and this sharp decline follows a recent high of 6.46 percent seen on October 16th.
Investors feel government debts are safe investments following concerns over a steep fall in Wall Street stock indexes due to economic turmoil and undecided fate of three of Detroit’s automakers.
There is a drastic reduction in the yields from bonds too which reinforces investor’s faith in the security provided by the debts backed by government.
Mortgage rates are directly linked to the debt yields from Freddie Mac and its start up subsidiary Fannie Mae. Since early September, trust of investors in the two finance companies has been strong as they are operating under the control of the government even though they are not explicitly guaranteed by the government.
When Freddie Mac and Fannie Mae were taken over by the government in the month of September, the thirty year mortgage rates which reached a high at 6.63 percent in late July dropped to 5.78 percent.
The five year mortgage adjustable rates fell from 5.98 percent last week to 5.87 percent while there was a fall in the one year adjustable mortgage rates from last week’s 5.33 percent to 5.29 percent. These rates do not include the add-on fees or points.
