Falling to 5.01 Percent, 30-Year Rates Hit Another Record Low

Rates on 30-year mortgages fell to a record level for a fourth straight week, dropping to the lowest mark since Freddie Mac started tracking the data nearly 38 years ago.

Rates have been falling since late November, when the Federal Reserve announced a plan to spend up to $500 billion to buy up mortgage-backed securities in efforts to buttress the distressed U.S. housing market.

Freddie Mac reported Thursday that average rates on 30-year fixed mortgages dropped to 5.01 percent this week from the previous record of 5.1 percent, set last week. It was the 10th straight weekly drop and nearly a full point below the average rate of 5.87 percent at the same time last year.

Rates at are their lowest since the company started its survey in April 1971. They have declined nearly 1.5 percentage points since October, Freddie Mac said.

For a borrower taking out a $200,000 loan, that means a savings of more than $184 in monthly payments, according to Frank E. Nothaft, the mortgage finance company's chief economist.

The falling rates had led to an increase in mortgage applications until last week. The Mortgage Bankers Association reported Wednesday that its weekly mortgage application index fell 8.2 percent for the week ended Jan. 2 compared with the previous week.

While the lower mortgage rates help mortgage holders with good credit and plenty of home equity who want to refinance, they do little to help those in foreclosure.

In Clearwater Beach, Fla., Valerie Saunders has seen a "dramatic upswing" in interest from people who want to refinance at her mortgage company, R.E. Financial Services. Saunders said she closed two transactions for 30-year, fixed-rate mortgages Wednesday, with a rate of 5 percent on one and 4.875 on the other.

"People should be jumping on it and taking advantage of these rates," Saunders said. "It's only going to have a positive effect."

The average rate on a 15-year, fixed-rate mortgage dropped to 4.62 percent, the lowest point since June 2003. That rate was 4.83 percent last week, Freddie Mac said.

Average rates on five-year, adjustable-rate mortgages fell to 5.49 percent, compared with 5.57 percent. Rates on one-year, adjustable-rate mortgages rose to 4.95 percent from 4.85 percent.

The rates do not include add-on fees known as points. The nationwide average fee for 30-year mortgages was 0.6 point this week. Fees for 15-year mortgages and five-year, adjustable-rate mortgages averaged 0.7 point, compared with 0.5 point for one-year, adjustable-rate mortgages.