Average conforming 30-year fixed mortgage rate hitting another record low of 4.53%.

Average 15-year fixed mortgage retreated to 4.05%.

The larger jumbo ($417,000 or more) 30-year fixed rate dropped to 5.17%, both record lows.

Average 5-year adjustable-rate mortgage (ARM) inched higher to 3.86%

Average 7-year ARM moved lower to 4.16%.

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

30-year fixed: 4.53% — down from 4.59% last week (points: 0.42)

15-year fixed: 4.05% — down from 4.08% last week (points: 0.40)

5/1 ARM: 3.86% — up from 3.85% last week (points: 0.30)

Employment Outlook

While mortgage rates are at record lows which is helping buyers to get into affordable homes, employment and the economic outlook are deterring them to make purchases.

Jobless claims decreased to 472,000 last week. Initial jobless claims fell by 6,000 to 472,000 in the week ended August 28, Labor Department figures showed.

The unemployment rate is at 9.6%. The number of Americans continuing to receive jobless benefits fell by 23,000 in the week ended August 21 to 4.46 million.

Low mortgage rates have yet to increase demand for homes. Depressed by unemployment and the expired home buyer tax credit, sales of new and previously owned homes fell to the lowest level on record in July.

The record low mortgages spurred a surge of loan refinancing as Americans seek to reduce their mortgage payments. Refinancing rose 2.8% in the week ended August 27 to the highest level since May 2009, according to the Mortgage Bankers Association’s index.

30-year fixed-rate mortgage averaged 4.32%, down from 4.36% last week and 5.08% a year ago.

15-year fixed-rate mortgage averaged 3.83% this week, down from 3.86% last week and 4.54% a year ago.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.54%. The ARM averaged 3.56% last week and 4.59% a year ago.

1-year Treasury-indexed adjustable-rate mortgage (ARM) averaged 3.5% this week, down from 3.52% last week and 4.62% a year ago.

To obtain the rates, the 30-year fixed-rate mortgage and the 1-year adjustable-rate mortgage required payment of an average 0.7 point, while the 15-year fixed-rate mortgage and the 5-year adjustable-rate mortgage required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Amy Crews Cutts, Feddie Mac deputy chief economist, said in a statement: “The 12-month price growth of core personal expenditures remained at 1.4% in July, which kept overall inflation expectations well at bay.”

“Fed chairman Bernanke reiterated this in his Aug. 27 speech in Wyoming, noting that with inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly. As a result, mortgage rates eased further this week to new historic lows.”

The Realtors’ data is collected from a large national sample, typically representing about 20% of transactions for existing-home sales. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Following the home buyer tax credit worth as much as $8,000 expired at the end of April, home sales and building activity have dropped sharply. The pending home sales index plunged 29.9% in May and another 2.8% in June.

Further improvements in real estate sector is heavily depend on creating jobs. While mortgage rates at record lows are helping to make homes more affordable, home buyers need to feel secure about their jobs and the overall economy.

The number of Americans seeking jobless benefits fell last week to a level that indicates the labor market has not improved this year. Initial jobless claims dropped by 6,000 to 472,000 in the week ended August 28, the Labor Department said. The unemployment rate is at 9.6%.

Lawrence Yun, NAR chief economist, said there would be a long recovery process in housing market.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

“Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget.”

Existing home sales, which account for about 90% of the housing market, fell 27% in July, the Realtors group said.

According to Freddie Mac, he average rate on a 30-year fixed mortgage dropped to a record-low 4.36% in the week ended August 26.

The Mortgage Bankers Association’s index rose 2.7%. Refinancing increased 2.8% to the highest level since May 2009, while purchases gained 1.8%.

The share of applicants seeking to refinance a home loan rose to 82.9%, the highest since January 2009, from 82.4% the prior week.

The falling cost in borrowing is prompting Americans to refinance loans to cut monthly payments. However, the low mortgage rates has failed to prevent a slide in purchasing demand following the end of a tax credit of as much as $8,000.

The housing market has been struggling since the home buyer tax credits ended on April 30 2010. The National Association of Realtors reported that existing home sales fell 27% in July 2010.

Average interest rate for 30-year fixed-rate mortgages decreased to 4.43% from 4.55%, with points increasing to 1.34 from 0.89 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

Average interest rate for 15-year fixed-rate mortgages decreased to 3.88% from 3.91%, with points decreasing to 1.45 from 1.64 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

Average interest rate for one-year adjustable-rate mortgages (ARM) increased to 6.95 percent from 6.84 percent, with points increasing to 0.23 from 0.22 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

“Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates. The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“The sharp decline in MBA’s Purchase Application index in May had provided a clear leading indicator of the drops in new and existing home sales that were reported for June and July. Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.”

Standard & Poor’s/Case-Shiller Home Price Indices show that the U.S. National Home Price Index rose 4.4% in the second quarter of 2010, after having fallen 2.8% in the first quarter.

Nationwide home prices are 3.6% above their year-earlier levels.

Housing prices have rebounded, however recent housing indicators point to weakening housing recovery as tax incentives have ended and foreclosures continue. Sale of new homes and existing homes fell declined sharply in July 2010.

The National Association of Realtors reported sales of existing homes in July fell 27% from the month a year ago to a seasonally adjusted annual sales rate of 3.83 million.

The Commerce Department reported that sales of new homes in July fell 13% from June, to a seasonally adjusted annual rate of 276,000 units.

“The monthly Composites cover June and the national index covers the second quarter, when the government’s program for first time home-buyers was winding down. While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.

“Even with concerns about near term developments, we recognize that the housing market is in better shape than this time last year. Further, California’s cities have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains. Among the other hard hit cities, the news is also a bit encouraging – Las Vegas, however, remains among the weaker cities.”

“Seventeen of the 20 MSAs and both Composites saw home prices increase in June over May – Las Vegas was down 0.6%, Phoenix and Seattle were both flat. Through the second quarter, 15 of the 20 MSAs and both Composites have positive annual growth rates, and no market is registering a double-digit decline.”

“The worry starts when you remember that the Homebuyers’ Tax Credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak. The inventory of unsold homes and months’ supply data were particularly troubling. If this relative weakness in demand continues, it will likely filter through to home prices in coming months.”

The number of U.S. homes headed for foreclosure fell during the second quarter of 2010, the first drop since 2006 and the largest quarter-to-quarter drop since 2005, the Mortgage Bankers Association said.

The percentage of mortgage loans somewhere in the foreclosure process was 4.57% in the second quarter, down from 4.63% in the first quarter, however still up from a 4.3% rate a year ago.

About 10% of homeowners had missed at least one mortgage payment as of June 30.

Foreclosures have also taken a toll on consumer confidence and are keeping buyers away from the market as they wait for home prices to fall even lower. The shadow inventory of homes headed to market is about 4.5 million.

The states with the highest rate of loans in foreclosures are in Florida at 11.5%, Nevada at 9.1%, Arizona at 4.8% and New Jersey at 4.3%.

“On the surface, there is good news on the foreclosure front, but not on short-term delinquencies,” said Jay Brinkmann, Chief Economist at Mortgage Bankers Association. “There’s a little pause. It could be short-term factors instead of a trend.”

“Ultimately, the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story.”

“First, 30-day delinquencies are very closely tied to first-time claims for unemployment insurance. The number of first-time claims fell through most of 2009 but leveled off in 2010 and have started to rise again. This increase in unemployment directly impacts mortgage delinquencies.”

“Second, some percentage of the loans modified over the last several years have become delinquent again because those borrowers, by definition, have weak credit.”

“Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers. Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak.”

About 10.1 million Americans were receiving unemployment benefits checks in the week ended August 7. The jobless rate is little under 10%. Economists expect little change in the job outlook, with unemployment to remain around 9.5% into next year.

“It takes a paycheck to make a mortgage payment, and that is key at this point,” said Brinkmann.

30-year fixed-rate mortgage average again fell to a record low of 4.36%. In the previous period, last week the average was 4.42%, and a year ago average was 5.14%.

15-year fixed loan dropped to 3.86% from 3.90% the previous week. That’s the lowest on records starting in 1991.

5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 3.56%, and down from 4.67% a year earlier.

1-year Treasury-indexed adjustable-rate mortgages (ARM) were 3.52%, down from 3.53% the previous week and 4.69% a year ago.

The mortgage rates do not include additional fees known as points. A point is 1% of the mortgage amount, charged as prepaid interest.

To obtain the rates, the 30-year fixed-rate and one-year adjustable-rate mortgages required payment of an average 0.7 point and the others required an average 0.6 point.

The low mortgage rates have fueled borrowers to refinance their home loans. The Mortgage Bankers Association reported that loan refinancing is at its highest level and made up 82.4% of all new loan activity.

“Existing home sales plunged 27% in July, while new homes fell 12% to a new all-time record low, which led to some market concerns that the housing market may slow the economic recovery. As a result, long-term bond yields fell to the lowest levels since January 2009, allowing fixed mortgage rates to ease to new record lows this week,” said Amy Crews Cutts, Freddie Mac’s deputy chief economist.

“Much of the slowdown in sales, however, was expected due to the recently expired home buyer tax programs, which pulled through future home purchases into the first half of the year.”

Unemployment is near a 26-year high at 9.5%.

Sales of new homes fell 12% in July 2010 from the previous month to the lowest annual pace since data dating to 1963, the Commerce Department said.

Existing home sales plunged 27.2% in July 2010 to the slowest annual pace of 3.83 million, since comparable records began in 1999, according to the National Association of Realtors.

Purchases dropped 12.4% to a seasonally adjusted annual rate of 276,000 in July, from a downwardly revised 315,000 in June. It is the weakest since data began in 1963, figures from the Commerce Department showed today in Washington.

Inventories of unsold homes remained flat in July at 210,000 for the second straight month, which represents a 9.1-month supply at the July sales rate, up from 8.0 month supply in June.

The median sales price fell 4.8% over the past year to $204,000. The lowest since late 2003.

Home sales had soared in March and April as home buyers rushed to purchase home ahead of the April 30 deadline for the $8,000 tax credit. As was expected, home sales plummeted in May, the first month after government support is removed.

Even with mortgage rates at record lows, buyers are waiting it out. The average rate on a 30-year fixed mortgage dropped to 4.42% in the week ended August 19, according to Freddie Mac.

Job loss and security is hurting consumer confidence, leading to a plunge in home demand that threatens to undermine economic recovery.

Private payrolls rose less than 71,000 in July and were revised down for the previous month, the Labor Department reported August 6. Unemployment will end the year at 9.5%, unchanged from the rate in June and July.

Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units, the National Association of Realtors reported yesterday.

Foreclosures and short-sales are boosting the shadow inventory. Home seizures increased almost 4% in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, according to RealtyTrac Inc.

Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 4.9%.

The MBA’s seasonally adjusted index of refinancing applications increased 5.7%.

The housing market has been struggling since the April 30 expiration of an $8,000 home buyer tax credits. Existing home sales fell in July to a 3.83 million annual rate, slowest pace in 15 years, the National Association of Realtors reported yesterday.

Average interest rate for 30-year fixed-rate mortgages decreased to 4.55% from 4.60%, with points decreasing to 0.89 from .92 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

Average interest rate for 15-year fixed-rate mortgages decreased to 3.91% from 3.99%, with points increasing to 1.64 from 1.05 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

Average interest rate for 1-year adjustable-rate mortgages (ARM) decreased to 6.84% from 6.90%, with points increasing to 0.22 from 0.21 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

“The volume of refi applications last week was up 26% over their level four weeks ago. Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“We are at a new 15 month high for the Refinance index. With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity.”

Existing-home sales, which include single-family, townhomes, condos, and co-ops, dropped 27.2% to a seasonally adjusted annual rate of 3.83 million in July from 5.26 million in June, and 25.5% below annual rate of 5.14 million a year ago.

Sales of single-family homes fell to the lowest level in 15 years as inventories soared, painting a grim picture for the housing market absent government support.

Inventories rose to 12.5 months from 8.9 months in June.

The national median existing-home price for all housing types was $182,600 in July, up 0.7% from a year ago.

Distressed home sales are unchanged from June, accounting for 32% of transactions in July.

Lawrence Yun, NAR chief economist, said. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September.”

“However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.”

“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years.”

Home buyers took advantage of a federal tax credit earlier this year, up to $8,000, which expired in April 30.

“Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses.”

“Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”

Home sales are expected to remain sluggish over the next few months despite the record low rate on 30-year fixed-mortgages. 30-year, conventional, fixed-rate mortgage fell to 4.56% in July from 4.74% in June.