Rate on 30-year mortgage falls to record-low 3.66 percent
WASHINGTON — The average U.S. rate on a 30-year fixed mortgage fell last week to a record low for the seventh time in eight weeks. Cheap mortgages have helped drive a modest recovery in the weak housing market this year.Mortgage buyer Freddie Mac said Thursday the average on the 30-year loan dropped to 3.66 percent. That’s down from 3.71 percent the previous week and the lowest since long-term mortgages began in the
1950s.
The average rate on the 15-year mortgage, a popular refinancing option,
declined to 2.95 percent. That’s down from 2.98 percent the prior week and just
above the record 2.94 percent reached three weeks ago.
The rate on the 30-year loan has been below 4 percent since December.
Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.
Still, the pace of home sales remains well below healthy levels. Sales of
previously occupied homes dipped in May to a seasonally adjusted annual rate of
4.55 million, although they are up from the same month last year.
Many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling.
The U.S. economy is growing only modestly and job creation slowed sharply in April and May. U.S. employers created only 69,000 jobs in May, the fewest in a year.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increases, the yield falls.
And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.
To calculate average rates, Freddie Mac surveys lenders across the country on
Monday through Wednesday of each week.
The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from the previous week. The fee for 15-year loans was 0.6 point, down from 0.7.
The average rate on one-year adjustable rate mortgages fell to 2.74 percent from 2.78 percent the prior week. The fee for one-year adjustable rate loans was unchanged at 0.5 point.
The rate on the 30-year loan has been below 4 percent since December.
Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.
Many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling.
The U.S. economy is growing only modestly and job creation slowed sharply in April and May. U.S. employers created only 69,000 jobs in May, the fewest in a year.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increases, the yield falls.
And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.
The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from the previous week. The fee for 15-year loans was 0.6 point, down from 0.7.
The average rate on one-year adjustable rate mortgages fell to 2.74 percent from 2.78 percent the prior week. The fee for one-year adjustable rate loans was unchanged at 0.5 point.
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