Japan Crisis Drives Down Mortgage Rates

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WASHINGTON – Long-term mortgage rates fell this week to their lowest level since January as the crisis in Japan caused a plunge in investor confidence and a rush to buy U.S. Treasury bonds, according to Freddie Mac.

The average for the benchmark 30-year, fixed-rate mortgage declined to 4.76% this week, from 4.88% last week; while the average for the 15-year loan fell to 3.97%, from 4.15%.

ARM rates all declined, with the average for the five-year ARM dipping to 3.57%, from 3.73% last week; and the average for the one-year ARM moving to 3.17%, from 3.21%.

“With the crisis in Japan, investors rushed to buy the security of U.S. Treasury bonds, which lowered its yields and other interest rates as well. This allowed fixed mortgage rates to drift lower this week,” said Frank Nothaft, chief economist for Freddie Mac. He added that families are “strengthening their balance sheets.”

“In the fourth quarter of 2010, household net worth rose by $2.1 trillion, boosted by gains in the stock market. This helped lower their financial obligation ratio (debt payments relative to disposable income) to the lowest level since the first quarter of 1995,” he said.


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