30-Year Rates Fall to Four-Year Low
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Saturday, December 13, 2008; Page G02
Rates on 30-year mortgages dropped this week to their lowest level in more than four years, effects of a startling November unemployment report and a government plan to buoy the housing market.
Freddie Mac reported Thursday that average rates on 30-year, fixed-rate mortgages dropped to 5.47 percent from 5.53 percent last week.
The rate is slightly below this year's previous low of 5.48 percent, reached in January, and the lowest since March 25, 2004.
Mortgage rates started falling after the Federal Reserve launched a sweeping new effort in late November to aid the housing market by buying up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
Fannie Mae and Freddie Mac own or guarantee about half of the $11.5 trillion in outstanding debt on U.S. home loans.
Freddie Mac, however, said November's bleak unemployment report was the main reason for the drop in rates. And on Thursday, the Labor Department reported that applications for jobless benefits last week rose to a seasonally adjusted 573,000 -- up from an upwardly revised figure of 515,000 the previous week and far more than economists expected.
"Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage rates room to ease back a little further," said Frank E. Nothaft, Freddie Mac's chief economist.
Falling rates have caused a jump in loan applications.
Although applications edged down last week, they are up for the past month, according to the Mortgage Bankers Association.
Meanwhile, rates this week fell on 15-year, fixed-rate mortgages to an average of 5.20 percent from 5.33 percent last week, Freddie Mac said.
Rates on five-year adjustable mortgages rose to 5.82 percent from 5.77 percent last week. Rates on one-year ARMs increased slightly to 5.09 percent, from 5.02 percent last week.
The rates do not include add-on fees known as points.
The nationwide average fee for 30-year and 15-year mortgages was 0.7 point last week. The fees on five-year, adjustable-rate mortgages averaged 0.6 point, while the fees on one-year ARMs averaged 0.4 point.
