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July 17, 2011

Mortgage Rates Tumble Following Weak June Jobs Report
According to mortgage giant Freddie Mac's weekly survey on US mortgage rates, the average for a 30 year, fixed rate loan fell to 4.51 percent this week from 4.60 percent a week ago. The average rate for a 15 year fixed loan, also fell, to 3.65 percent from 3.75 percent last week. Both loans are below their averages from a year ago at this time. Rates have fallen, a Freddie Mac spokesman said, because long term bond yields fell this week after a disappointing jobs report. Mortgage rates typically follow the yield of the 10-year Treasury bond, which fell as investors, spooked by the weak jobs report, sought the relative safety of bonds.

The Labor Department reported last Friday that US employers added just 18,000 jobs in June, well below the number economists had projected, forcing the national jobless rate up to 9.2 percent, higher than it's been since last December. Additionally, employee wages have become relatively stagnant, failing to match inflation. The combination of stagnant wages and normal inflation will likely lead to a slowdown in consumer spending, a vital economic statistic that accounts for more than three fourths of the overall economy.

Rates for variable-rate mortgages also fell this week, though not by as much. The average rate for a 5-year Treasury-indexed hybrid adjustable-rate mortgage, or ARM, was 3.29 percent, down from 3.3 percent a week ago. The 1-year Treasury-indexed hybrid ARM, meanwhile, averaged 2.95 percent, down from 3.01 percent a week ago. To obtain average mortgage rates, Freddie Mac tracks rates at lenders across the country between Monday and Wednesday. Rates can often fluctuate significantly, even within a single day.

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