Watch CBSN Live

Mortgage Interest Rates Fall Below 4 Percent

Is a recession coming? Judging by where mortgage interest rates are, and the new all-time low they reached this week, the answer might be "Batten down the hatches."

According to Freddie Mac's weekly Primary Mortgage Market Survey (PMMS), today's 30-year fixed rate mortgage average reached 3.94 percent, crossing the 4 percent mark for the first time in history. In other words, 30-year mortgage interest rates have never been lower.

Here are the results of this week's survey:

  • 30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.
  • 15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it also averaged 3.02 percent. A year ago, the 5-year ARM averaged 3.47 percent.
  • 1-year Treasury-indexed ARM averaged 2.95 percent this week with an average 0.5 point, up from last week when it averaged 2.83 percent. At this time last year, the 1-year ARM averaged 3.40 percent.
According to Frank Nothaft, vice president and chief economist of Freddie Mac, the shop drop in the 10-year Treasuries earlier in the week stem from growing concerns that the world is facing a global recession.

"Interest rates for 1-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs," Nothaft said. "Also, in his testimony to Congress's Joint Economic Committee on Tuesday, Federal Reserve Chairman Bernanke said the recovery is close to 'faltering' and stressed the need for lawmakers to act."

Nothaft also noted in the press release announcing the survey that "The Bureau of Economic Analysis (BEA) reported consumer spending inched up 0.2 percent in August, while personal income fell 0.1 percent, the first decline since October 2009. Also, pending home sales declined for the second consecutive month in August, with some of the decline attributed to Hurricane Irene."

While there has been some positive news with respect to corporate profits recently, unemployment remains stubbornly high. This week's first-time unemployment claims rose to 401,000. While that is less than some economists predicted, it is well above the level required to begin to bring down the official unemployment rate of 9.1 percent.

More on MoneyWatch:

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.comand The Equifax Pe