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U.S. mortgage interest rates continued to fall week after week in December, as economic data all pointed to harder times ahead.
December 4
During the first week of the month, interest rates on 30-year fixed rate mortgages (FRM), as reported by Freddie Mac, fell to 5.53 percent, excluding points, from 5.97 percent the previous week. The average rate on a 15-year FRM dropped to 5.33 percent from 5.47 percent, while the one-year adjustable rate mortgage (ARM) averaged 5.02 percent, down from 5.18 percent one week earlier. The interest rate dive was attributed to actions by the Federal Reserve to create more liquidity in the banking and mortgage industries.
December 11
The 30-year FRM fell to an average rate of 5.47 percent during the second week, the 15-year FRM rate dropped to 5.20 percent, and the one-year ARM rose to 5.09 percent. 
According to Freddie Mac, the continued decline of long-term mortgage rates was the result of a dismal employment report, showing a 34-year record decrease in jobs. Adding to the poor economic news was a report from the National Association of Realtors indicating a 1.0 percent drop in pending sales for the month of October.
December 18
The third week of December rate decreases on both long and short-term loans. The average rate on a 30-year FRM sank to 5.19 percent, the lowest rate on record since the beginning of Freddie Mac's weekly survey in 1971. Meanwhile the average on a 15-year FRM dropped to 4.92 percent and the one-year arm fell to 4.94 percent.
The dramatic rate declines were expected, however, in the wake of an unprecedented move by the Federal Reserve to slash its federal funds rate to a range of zero to 0.25 percent. The Fed also declared itself ready to buy up more mortgage-related securities if conditions continue to worsen.
December 24
The last full week of December found interest rates falling again, with the 30-year FRM reaching a new low of 5.14 percent. The 15 FRM inched down to 4.91 percent, a four and a half year low. One-year ARMs averaged a rate of 4.95 percent, up slightly from the previous week.
Freddie Mac believed the long-term rate decline to be caused by a 0.5 percent decrease in the real Gross Domestic Product (GDP) in the third quarter. Existing home sales continued to drop, falling 8.6 percent in November, according to the NAR.
What's Next for Interest Rates?
Rates on 30-year fixed rate mortgages have fallen for eight consecutive weeks, and with economists continuing to predict slower economic growth and housing market movement, interest rates are likely to decline even further in coming weeks.
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