Rates on 30-year mortgages sank this week to their lowest level in more than a year, offering a dose of welcome news to prospective home buyers who still face soaring home prices in many markets.
Rates on 30-year fixed-rate mortgages averaged 5.53 percent, down from 5.57 percent last week, Freddie Mac said in its weekly survey for the week ended June 30. This week's rate was the lowest since early April 2004, when rates on 30-year mortgages averaged 5.52 percent, a Freddie Mac spokeswoman said.
Rates on 15-year fixed-rate mortgages, often used when refinancing a home mortgage, averaged 5.12 percent, down from 5.16 percent last week.
"With still little or no threat of inflation to be found, long-term mortgage rates this week had some breathing room and that allowed rates to drift a little lower," said Frank Nothaft, Freddie Mac's chief economist.
While long-term mortgage rates fell this week, short-term rates edged up.
Rates on one-year adjustable-rate mortgages were at 4.24 percent this week, up slightly from 4.23 percent last week. For five-year hybrid adjustable-rate mortgages, rates increased to 5.06 percent, from 5.05 percent.
Low mortgage rates, which powered home sales to record highs four years in a row, are keeping the housing market buoyant. House prices nationwide rose 12.5 percent over the 12 months ended March 31, according to figures compiled by the Office of Federal Housing Enterprise Oversight.
The nationwide averages for mortgage rates do not include add-on fees known as points. The one-year ARM had an average fee of 0.7 point; the other three mortgage categories each carried a fee of 0.6 point.
A year ago, 30-year mortgages averaged 6.21 percent, 15-year mortgages were at 5.62 percent and one-year ARMs averaged 4.19 percent. Freddie Mac does not have historical data on the five-year ARM, which it began tracking this year.