- 4.65% (30-year fixed)
- 0.39 (average points)
Here's a look at the state of mortgage rates from Bankrate.com's weekly national survey of large banks and thrifts conducted June 8, 2011.
The average rate on a 30-year fixed-rate mortgage inched downward to 4.65 percent, a drop of 4 basis points from last week's 4.69 percent. A basis point is one-hundredth of 1 percentage point.
The popular 15-year fixed-rate mortgage also declined, dropping 9 basis points to 3.79 percent. Another fixed-rate product, the 30-year jumbo mortgage, averaged 5.19 percent, up 3 basis points. Jumbo mortgages are generally those for more than $417,000.
Adjustable mortgages receded as well, with the 5/1 ARM settling at 3.35 percent, compared to 3.39 percent a week earlier.
A report released this week by real estate research firm CoreLogic Inc. on mortgages at the end of the first quarter shows almost 40 percent of homeowners who have second mortgages are underwater, meaning their homes are worth less than the balance on their loan.
"Those in negative equity and impacted by an income shock of some kind, such as a job loss, divorce, or death, are much more likely to be at risk of foreclosure or a short sale," says Mark Fleming, chief economist with CoreLogic. "The existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity."
Meanwhile, last week's payroll and employment numbers gave more proof that the economy is weakening. The U.S. added only 54,000 jobs in May, far fewer than economists had forecast.
In addition, the unemployment rate rose one-tenth of a percent to 9.1 percent, making the stock market grumpy. The Standard & Poor's 500 index closed with its fifth straight weekly fall.
Federal Reserve Chairman Ben Bernanke said in a speech on Tuesday that the recovery appears to be continuing at a moderate pace, but "at a rate that is both uneven across sectors and frustratingly slow from a perspective of millions of unemployed and underemployed workers."
While the Fed pumps fresh cash into the economy through its program known as "QE2" (for the second round of quantitative easing), that money isn't filtering down to consumers. A Gallup poll showed that daily consumer spending in U.S. stores, restaurants, gas stations and online remains stagnant, averaging $69 per day in May compared to $65 in April and $72 a year ago.
As if to drive the point home, the Fed reported this week that revolving debt, including credit cards, dropped by $944 million in April after a slight increase in March. Still, overall consumer credit rose by $6.25 million, but the increase resulted from an uptick in student and car loans.
Ultimately, consumer spending must take a larger role in the economic recovery. "The ability and willingness of households to spend will be an important determinant of the pace at which the economy expands in coming quarters," Bernanke says.-- Stephen Pounds