Mortgage rates drop to record low; 30-year at 4.85%
WASHINGTON -- Rates on 30-year mortgages fell this week to the lowest level on record after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.85% this week, from 4.98% last week. It was the lowest in the history of Freddie Mac's survey, which dates back to 1971 and was down a full percentage point from a year ago.
The average rate on a 15-year fixed-rate mortgage dropped to 4.58%, down from 4.61%.
Rates on five-year, adjustable-rate mortgages fell to 4.96%, compared with 4.98%. Rates on one-year, adjustable-rate mortgages rose fell to 4.85%, from 4.91%.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.
Rates have been driven down by the Federal Reserve's decision last week to buy up to $300 billion of long-term government bonds and $750 billion in mortgage-backed securities held by Fannie and Freddie.
The falling rates are jolting homeowners and buyers:
•Homeowners who had been waiting to refinance say they're now getting great deals. Nancy Hemenway, 58, of Arlington, Va., is closing on a refinance in a couple of weeks.
"We were watching the rates and didn't see how they could go much lower," says Hemenway, executive director of a non-profit. "We thought there might be a problem because banks weren't lending, but that didn't happen at all. We just filled out some paperwork and faxed it."
•Low prices on foreclosed homes are luring buyers into the market. Up to 45% of existing home sales in February were distressed properties, according to a report this week by National Association of Realtors.
Michael McCullough, a public relations specialist in Atlanta, is closing today on a 3,000-square-foot home with a large yard and four bedrooms.
