Mortgage rates drop to new all-time low

Mortgage rates have fallen to another record high, according to government-sponsored mortgage finance company Freddie Mac.

The average rate over the past week for a 30 year fixed rate mortgage has fallen to 2.67%, and the average rate for a 15 year fixed rate mortgage has fallen to 2.21%.

Danielle Hale, chief economist of the real estate ad website, said low mortgage rates have contributed to a buying frenzy in the housing market.

“Buyers keen on getting a home this holiday season will likely have a hard time finding a home that ticks all the boxes and winning in a competitive market,” she said. Competition has driven home selling prices at the fastest pace in 15 years, despite the recession, according to Hale.

HOME SALES: Single-family home sales increase for the sixth consecutive month

While historically low mortgage rates are a boon to homeowners looking to refinance or sell their homes, they signal a struggling economy. When investors get nervous, they look for safer investments and pour money into government bonds and mortgage debt, much of which is backed by Freddie Mac and his sister company Fannie Mae.

Investors are so hungry for security that they are willing to accept lower yields, driving down the interest paid on bonds and mortgages. The Federal Reserve’s actions to support the economy, including cutting short-term rates to near zero and buying government-backed and mortgage-backed bonds, are also pushing mortgage rates down.

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