30-Year Rates Tie Record Low, Dipping Down to 4.78 Percent

Rates on 30-year mortgages tied a record low this week, spurring refinancing activity as the troubled housing market moved closer to hitting the bottom, Freddie Mac said Thursday.

Average rates on 30-year, fixed-rate mortgages, the most popular loan among home buyers, slid to 4.78 percent from 4.8 percent last week, Freddie Mac said. Last year at this time, the average rate on a 30-year mortgage was 6.06 percent.

The low, 4.78 percent, was set the week of April 2. Freddie Mac's annual survey dates to 1971.

"We're all cheering for the mortgage rates to keep moving lower," said Scott Anderson, senior economist at Wells Fargo. "There really isn't a better place than the 30-year conventional for value."

Low mortgage rates have led to more refinancing activity since rates first fell dramatically, in the winter. Rates slid again after the Federal Reserve said 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.

Frank E. Nothaft, Freddie Mac's chief economist, said the low rate means that those who refinance a $200,000 loan would save almost $212 in monthly mortgage payments, or more than $2,500 per year.

Borrowers who refinanced during the first quarter reduced their mortgage payments by about $2.5 billion over the coming year, and half of borrowers who refinanced lowered their annual interest rate by at least 20 percent, according to Freddie Mac's quarterly Refinance Report.

With inventories apparently dropping and affordability rising, there are some positive signs, Freddie Mac said.

"The housing market may be edging toward a bottom," Nothaft said.

Freddie Mac also said the average rate on a 15-year, fixed-rate mortgage was 4.48 percent this week, unchanged for the third straight week.

Rates on five-year, adjustable-rate mortgages fell to 4.80 percent from 4.85 percent last week -- the lowest since Freddie Mac began tracking it in January 2005.

Average rates on one-year, adjustable-rate mortgages fell to 4.77 percent from 4.82 percent.

Borrowers can reduce their interest rate by paying a fee called a point. Each point costs 1 percent of the mortgage amount. The nationwide average was 0.7 point last week for every type of mortgage mentioned in Freddie Mac's survey except for the five-year, adjustable rate mortgage, which averaged 0.6 point.

Freddie Mac collects mortgage rates from lenders around the country. Actual rates can fluctuate significantly.