WASHINGTON-Long-term mortgage rates plunged again last week to record lows, putting more pressure on credit unions and other lenders who depend on loan interest as their bread-and-butter.

The declining rates are attributed to the fall in the rate for 10-year Treasuries-to which the 30-year mortgage rate is tied-also to record lows, to around 1.5%. "That's the lowest rate it's been in modern history," Bill Hampel, chief economist for CUNA, told Credit Union Journal, noting the jitters over the European financial crisis driving the rate down.

The average rate for the benchmark 30-year, fixed-rate mortgage declined from a record low of 3.62% last week to 3.56% this week; while the average for the 15-year mortgage fell from a record 2.89% to 2.86%, according to Freddie Mac.

Short-term rates also hovered at record lows, with the average for the five-year ARM falling from 2.79% to 2.74%; and the average for the one-year ARM ticking up from 2.68% to 2.69%.

The free-fall in rates is putting increasing pressure on credit unions, making it riskier to hold loans on their books and trimming already low spreads between costs of funds-already at record lows too-and interest-earning assets, noted Hampel. He suggested that credit unions sell more of their low-interest mortgages, keep their cost of funds down and look to fees to make up some of the lost income.

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