Mortgage rates tumbled to the lowest level in the history of Freddie Mac's weekly survey, with 30-year fixed-rate home loans being offered this week at an average 4.15%, down from 4.32% last week.
The mortgage giant said in its weekly report Thursday that loans with variable interest rates also hit record lows, as did shorter-term fixed-rate loans. The 15-year fixed-rate loan, a popular choice with people refinancing their homes, was being offered at an average rate of 3.36%, down from 3.50% last week, Freddie Mac said.
The survey includes loans made with minimal payments of fees and points to lenders. The borrowers getting 30-year loans this week would have paid an average of 0.7% of the loan amount in upfront fees and discount points, and borrowers would have paid 0.6% of the loan amount for the 15-year fixed loans, Freddie Mac said.
The rates, available to the lucky folks who have weathered the recession and housing debacle in solid financial shape, are the lowest since Freddie Mac's survey began in 1971 — and almost as low as anyone can recall.
Long-term fixed-rate mortgages backed by the Federal Housing Administration averaged 4.08% for a several months in 1950-51, according to the National Bureau of Economic Research. FHA loans, which have additional costs, are available to people who are greater credit risks than those in the Freddie Mac survey.
Long-term mortgage rates tend to track the yield on the 10-year Treasury note, which has tumbled in recent weeks as investors bailed out of the stock market and loaded up on Treasuries, seeing them as a less scary investment option.
The Freddie Mac survey's previous low for the 30-year loan was 4.17%, recorded in November after the Federal Reserve said it would buy $600 billion in Treasury securities, creating demand that drove down the 10-year T-note's yield.
This week's drop in loan rates came on the heels of the Fed's announcement last week that it expected to keep short-term interest rates low for at least two more years because of the faltering economic recovery.
Despite the low rates, the housing market remains sluggish. About 70% of all home-loan applications in the first half of this year were for refinancings, not home purchases, Freddie Mac economist Frank Nothaft said.
Freddie Mac surveys lenders across the nation each week from Monday through Wednesday, asking them for the combination of rates and fees they are providing on popular mortgages.
The rates are available only to borrowers with solid credit, enough verifiable income to support payments and a 20% down payment for a purchase or 20% home equity for a refinancing.
Well-qualified borrowers who shop around often obtain slightly better rates, and it's possible to lower the rates further by paying additional upfront fees known as discount points.