Rates on 30-year fixed mortgages approach record low

Saturday, June 12, 2010; F02

Rates on 30-year fixed mortgages fell this week to the lowest level of the year and were close to the all-time low.

Mortgage finance company Freddie Mac said Thursday the average rate sank to 4.72 percent, down from 4.79 percent last week. It was just above the record of 4.71 percent set in December.

The average rate on a 15-year fixed-rate mortgage was 4.17 percent, down from 4.2 percent last week and the lowest on records dating from August 1991.

Rates on five-year, adjustable-rate mortgages averaged 3.92 percent, down from 3.94 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.91 percent from 3.95 percent. That was the lowest average since May 2004.

Although mortgage rates are at attractive levels, the housing market has not benefited. The number of customers applying for a home mortgage fell to the lowest level in 13 years last week and was down 35 percent from a month ago, according to the Mortgage Bankers Association.

It is a sign that the market is struggling without the tax credit of as much as $8,000 for first-time buyers, which expired at the end of April.

Concern that Europe's most-indebted nations may default has driven demand for Treasuries, sending yields on the 10-year note last month to the lowest level since April 2009. Yields on government-supported bonds tied to home loans are tracking that decline.

Also, the latest report on U.S. employment showed that few private-sector jobs are being created. That made investors nervous about the stock market and pushed up bond prices, which pulls down rates.

"Following a relatively weak employment report, bond yields fell this week and mortgage rates followed," said Frank Nothaft, Freddie Mac's chief economist.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac's survey averaged 0.7 of a point for 30-year, 15-year and five-year loans. The average fee for one-year loans was 0.6 of a point.

-- From news services

© 2010 The Washington Post Company