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Mortgage rates sink; likely to fall further

March 20, 2009|Associated Press

WASHINGTON — Rates on 30-year mortgages plunged to a record low Thursday after the Federal Reserve launched a new effort to prop up the flailing housing market.

The national average rate on 30-year fixed mortgages was 4.94% on Thursday, according to financial publisher HSH Associates, down nearly a quarter point from a day earlier. That's the lowest on HSH's records, which date to 1979.

For borrowers with stable jobs and good credit, it represents an opportunity to refinance at the lowest rates in decades. But people with less-than-perfect credit are likely to pay higher rates.

Interest rates have drifted lower since November, when the Federal Reserve pledged to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market.

Earlier Thursday, mortgage finance giant Freddie Mac said average rates on 30-year fixed mortgages dropped to 4.98% this week, down from 5.03% last week.

It was the lowest since the week of Jan. 15, when it was at 4.96%, the lowest point in the history of Freddie Mac's survey, which goes back to 1971.

Freddie Mac's survey included rate quotes taken before the Fed said Wednesday that it would pump $1.2 trillion into the economy in an effort to lower rates on mortgages and other loans and loosen credit.

The average rate on a 15-year fixed mortgage dropped to 4.61%, down from 4.64% last week, Freddie Mac said.

Rates on five-year adjustable mortgages fell to 4.98%, compared with 4.99% last week. Rates on one-year adjustable mortgages rose to 4.91% from 4.8% last week.

The rates do not include add-on fees known as points. Nationwide, the average fee for fixed- and adjustable-rate mortgages was 0.7 point last week.

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