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Posted at 10:00 AM ET, 05/31/2012

Mortgage rates free fall continues; 15-year dips below 3 percent

Mortgage rates continued plummeting this week, with three of the four benchmark rates averaging less than 3 percent for the first time on record, according to a report released Thursday by Freddie Mac.


The 30-year average has hit a new record low in each of the last five weeks. (Ty Wright - BLOOMBERG)
The 15-year fixed-rate average dropped to a new record low of 2.97 percent, down significantly from 3.04 percent the week prior and far off its mark of 3.74 percent this time last year. Both hybrid adjustable-rate averages are also below the 3-percent barrier, with the 5-year at 2.84 percent and the 1-year at 2.75 percent.

Meanwhile, the free fall continued for 30-year fixed-rate mortgages, which dropped to a fifth straight all-time low at 3.75 percent, down from 3.78 percent last week. The average remains well below its mark of 4.55 percent one year ago.

Frank Nothaft, Freddie Mac’s vice president and chief economist, pegged the unprecedented rates to plunging bond yields and soaring home prices.

“Market concerns over tensions in the Eurozone led to a decline in long-term Treasury bond yields helping to bring fixed mortgage rates to new record lows this week,” Nothaft said in a statement. “Compared to a year ago, rates on 30-year fixed mortgage rates are almost 0.9 percentage points lower which translates into nearly $1,200 less in annual payments on a $200,000 loan.”

The number of Americans who signed contracts to buy a house dropped from a 2-year high in March to a four-month low in April, according to a report released Wednesday by the National Association of Realtors. Nothaft also pointed out that a day earlier, Standard & Poor’s/Case-Shiller released data showing that home prices in March rose in most metropolitan areas for the first time since August.

Last week in Washington, more than 14,000 realtors descended on Capitol Hill to urge lawmakers to extend a series of tax code provisions they say would help millions of homeowners stay in their houses and millions of prospective buyers afford a new home.

Related: U.S. home sales contracts slump to 4-month low

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By  |  10:00 AM ET, 05/31/2012

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