POSTED: 01:30 a.m. HST, Oct 08, 2010
NEW YORK » Rates on 30-year mortgages fell to the lowest level in decades for the ninth time in 12 weeks, pushed down by traders anticipating a move by the Federal Reserve to pump more money into the economy.
The average rate for 30-year fixed loans dropped to 4.27 percent, mortgage buyer Freddie Mac said yesterday. That's the lowest on records dating back to 1971, and down from 4.32 percent the previous week.
The average rate on 15-year fixed loans, a popular choice for refinancing, dropped to 3.72 percent from 3.75 percent. That was lowest on records dating back to 1991.
Rates have mostly fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.
The 30-year rate was 5.08 percent at the beginning of April, while the 15-year rate was 4.39 percent.
Treasury yields have dropped in recent weeks as investors predict that the Federal Reserve will soon increase its Treasury purchases to help boost the economy. That has pushed down rates.
The yield on the closely watched 10-year bond reached its lowest point this year at 2.39 percent Wednesday following a surprisingly weak employment report.
However, historically low rates haven't helped the struggling housing market, which recorded its worst summer in more than a decade.
Applications for mortgages to buy homes rose last week to the highest level since May, according to the Mortgage Bankers Association on Wednesday. However, that level is almost 32 percent below the level at the end of April, when homebuyer tax credits expired.
Rates on five-year adjustable-rate mortgages averaged 3.47 percent, down from 3.52 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.40 percent from 3.48 percent.
The rates do not include add-on fees known as points.