- Associated Press - Thursday, May 12, 2011

NEW YORK - Fixed mortgage rates have fallen to their lowest levels of the year, giving Americans more incentive to buy homes or refinance their loans.

Freddie Mac said Thursday the average rate on 30-year loans fell to 4.63 percent from 4.71. The average rate on 15-year fixed mortgages slipped to 3.82 percent from 3.89 percent. Both are at their lowest points since December, having declined four weeks in a row.

Rates track the yield on the 10-year Treasury note, which this week fell close to its lowest level of the year.

Low mortgage rates could boost the struggling housing market, which has dragged on the economy. Home sales are far below healthy levels. Most homebuilders reported a drop in new orders in the first three months of the year, an indication of future activity.

Job worries and strict lending standards have kept potential buyers on the sidelines. The high number of foreclosures is forcing home prices down as well, leaving some would-be buyers concerned that prices have yet to bottom out.

Fewer homeowners had their houses repossessed by banks in April than a year ago, the foreclosure listing firm RealtyTrac Inc. said Thursday. But that’s because it is taking lenders longer to take back homes already in the foreclosure process because of paperwork delays. Last fall, evidence surfaced that lenders pushed through foreclosures without properly reviewing each case.

The holdup threatens to push back a resolution to the foreclosure crisis and a meaningful recovery in housing.

Freddie Mac reported that the average rate on a five-year adjustable-rate mortgage fell to 3.41 percent from 3.47 percent. The five-year adjustable-rate loan hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on a one-year adjustable-rate loan fell to 3.11 percent from 3.14 percent. That marked the lowest level for the rate on the 1-year ARM in the last year.

The rates do not include add-on fees, known as points.