- The Washington Times - Friday, March 27, 2009

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 percent this week from 4.98 percent last week. It was the lowest in the history of Freddie Mac’s survey, which dates to 1971 and was down a full percentage point from a year ago.

The previous low of 4.96 percent was reached the week of Jan. 15. Rates fell after the Fed last week said it would pump $1.2 trillion into the economy in an effort to lower rates on mortgages and loosen credit.

Rates on 30-year mortgages traditionally track yields on long-term government debt.

Though the yield on the benchmark 10-year Treasury note initially plunged by about 0.5 percentage point after the Fed’s move, lenders did not pass the entire drop on to borrowers. Bond yields rose after worries about what some saw as lackluster demand at a government debt auction Wednesday.

Mortgage applications surged last week, mostly from borrowers looking to refinance and save money on their monthly payment. The Mortgage Bankers Association said Wednesday that its weekly application index climbed more than 30 percent for the week that ended March 20.

Nearly 80 percent of applications came from borrowers seeking to refinance home loans at lower rates, rather than purchase homes.

In Freddie Mac’s survey, the average rate on a 15-year fixed-rate mortgage dropped to 4.58 percent this week from 4.61 percent last week.

Rates on five-year, adjustable-rate mortgages fell to 4.96 percent, compared with 4.98 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.85 percent from 4.91 percent.

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.

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