Mortgage rates at 37-year low: average 5.19% for 30 years

Thursday, December 18th, 2008

Alan Zibel
USA Today

WASHINGTON — Rates on 30-year-fixed mortgages dropped this week to their lowest levels in at least 37 years, as the Federal Reserve pledged to pour money into the mortgage market to spur home sales and refinancings.

Freddie Mac, the mortgage company, reported Thursday that average rates on 30-year fixed-rate mortgages dropped to 5.19% from the year’s previous low of 5.47%, set last week.

The rate is the lowest since Freddie Mac’s weekly mortgage rate survey began in April 1971.

Mortgage rates started falling after the Fed launched a sweeping effort in late November to help the U.S. housing market by buying up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

A daily survey found the national average rate fell even lower Wednesday. Rates on 30-year, fixed mortgages averaged 5.06%, according to financial publisher HSH Associates, lowest since the 1960s and down from 5.3% Tuesday.

On Wednesday, some mortgage brokers were quoting interest rates close to 4.5% for people with strong credit and hefty down payments.

It is the best news in months for anyone looking to lock in a 30-year, fixed-rate mortgage. But it is not expected to be a cure-all, and borrowers already in danger of foreclosure probably won’t be able to take advantage because only borrowers with stellar credit can qualify for the lowest rates.

“It’s a call to action for homeowners looking to get out of adjustable-rate mortgages,” says Greg McBride, senior financial analyst at “Unfortunately, it’s not an equal-opportunity party.”

Rates also fell this week on 15-year fixed-rate mortgages to an average 4.92%, from 5.2% last week, Freddie Mac said.

Rates on five-year, adjustable-rate mortgages fell to 5.6%, vs. 5.82% last week. Rates on one-year, adjustable-rate mortgages dropped to 4.94%, from 5.09% last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point last week. The fee on five-year, adjustable-rate mortgages averaged 0.6 point, while the fee on one-year adjustable-rate mortgages averaged 0.5 point. A point is one percent of the loan amount.

Mortgage application volume jumped last week, fueled by borrowers seizing on lower rates to refinance home loans, the Mortgage Bankers Association said Wednesday.

The trade group’s seasonally adjusted application index rose 2.9% for the week ended Dec 12.

The Federal Reserve, aiming to free up lending and jolt the economy back to life, on Tuesday cut its federal funds rate target from 1% to a range of zero to 0.25% and pledged to keep funneling money into the market for mortgage investments.

Mortgage brokers are already reporting a surge of calls from borrowers trying to take advantage of lower rates.

Falling interest rates mean Americans could suddenly find billions of extra dollars in their pockets at a time when consumers have sharply cut spending in the face of rising unemployment and declining household wealth. But many experts believe interest rates alone won’t be enough to jump-start the economy.

Copyright 2008 The Associated Press

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