30-Year Rates Fall to Record 4.78%
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Saturday, April 4, 2009
Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year, fixed-rate mortgages dropped to 4.78 percent this week from 4.85 percent last week.
It was the lowest in the history of Freddie Mac's survey, which dates to 1971. Rates are down by more than a full percentage point from a year ago.
"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday that its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.
Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Lenders, however, have tightened their standards over the past year, so the best rates are available to only those with solid credit.
The average rate on a 15-year, fixed-rate mortgage dropped to 4.52 percent this week from 4.58 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate loans fell to 4.92 percent, compared with 4.96 percent. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent from 4.85 percent.
The rates do not include add-on fees known as points. Nationwide, the fees averaged 0.7 point last week for all mortgages in Freddie Mac's survey except one-year adjustable mortgages, which had an average fee of 0.6 point.
