Mortgage rates dip, send refi signal

Mortgage rates plummeted again this week, amid turmoil in the financial markets worldwide as investors panic and seek safety in U.S. Treasuries and mortgage bonds.

Mortgage rates for August 10, 2011
Find the best mortgage rates in your area.

The benchmark 30-year fixed-rate mortgage fell 8 basis points this week, to 4.46 percent, according to the national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.36 discount and origination points. One year ago, the mortgage index was 4.57 percent; four weeks ago, it was 4.69 percent.

The benchmark 15-year fixed-rate mortgage fell 7 basis points, to 3.61 percent. The benchmark 5/1 adjustable-rate mortgage rose 1 basis point, to 3.24 percent, and the benchmark 30-year, fixed-rate jumbo fell 4 basis points, to 5.02 percent.

This is the lowest rate on the 30-year fixed in more than nine months. In nearly 26 years of Bankrate's survey, the record low for the 30-year fixed was 4.42 percent. It hit that record Oct. 20, 2010, and again Nov. 3, 2010. This is the rate's lowest level since that rate-setting day last November.


Weekly national mortgage survey

Results of's Aug. 10, 2011, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
 30-year fixed15-year fixed5-year ARM
This week's rate:4.46%3.61%3.24%
Change from last week:-0.08-0.07+0.01
Monthly payment:$832.11$1,188.49$717.19
Change from last week:-$7.85-$5.71+$0.91
What would the monthly payment be for you? Use Bankrate's mortgage calculator to find out.

Two rates set records this week. At 3.61 percent, this is the lowest that the 15-year fixed has been in the nearly 26-year history of Bankrate's weekly survey. The previous low was 3.68 percent, set last week; the record low before that was set June 8, 2011, at 3.79 percent. And at 5.02 percent, the jumbo 30-year fixed eclipsed the previous record low of 5.04 percent, set Nov. 3, 2010. Bankrate has been collecting information on the 30-year, fixed-rate jumbo since December 1998.

A wave of bad news for investors

Who should you thank for the super-low rates? Thank Congress's inability to reach a debt ceiling agreement until the eleventh hour last week and Standard & Poor's for downgrading the United States' credit rating on Friday and downgrading Fannie Mae's and Freddie Mac's debt on Monday. Also, thank the debt crisis in Europe and the Fed for announcing Tuesday that it will keep the key interest rate near zero percent until 2013.

None of these events are good news for the economy, but they trigger fear, and in the financial world fear normally results in lower mortgage rates. That's because when investors panic they pull out of the stock market, which is what they have done in the past week and why stock prices have tumbled. Investors are overwhelmed by the latest developments and scared of a global economic recession. As strange as it may sound, they see U.S. Treasury bonds as a safe haven. The increased demand for bonds results in lower yields, which normally translates into lower mortgage rates.


"It's absolutely crazy," says Brett Sinnott, director of secondary marketing at CMG Mortgage in San Ramon, Calif. "You would assume (after the downgrade) everybody would flee Treasuries, but it's been the opposite."

Debt deal and the downgrade

Mortgage rates had already plunged last week after Congress agreed Tuesday to raise the debt ceiling. When Standard and Poor's downgraded the U.S. triple-A credit rating, many observers expected rates to rise. They tumbled instead.

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