The U.S. economy remains weak with yet another reminder coming in the form of disappointing retail sales figures for August. But the latest drop in mortgage rates is also due to the ongoing debt issues on the other side of the Atlantic. The nervousness about whether Europe's debt problems will mushroom into a widespread financial panic has helped bring both bond yields and mortgage rates lower. Next week, the Federal Reserve meets, and expectations call for another initiative designed, among other things, to keep mortgage rates low.
The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.32 percent, the monthly payment for the same size loan would be $992.09, a difference of $249 per month for anyone refinancing now.
30-year fixed: 4.32% - down from 4.35% last week (avg. points: 0.42)
15-year fixed: 3.44% - down from 3.48% last week (avg. points: 0.36)
5/1 ARM: 3.07% - down from 3.10% last week (avg. points: 0.42)