WASHINGTON (AP) ó The average rate on the 30-year fixed mortgage fell again,
this time dropping below 3.50 percent for the first time on records dating
back 60 years.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan
declined to 3.49 percent. Thatís down from 3.53 percent last week and the
lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year fixed mortgage, a popular refinancing
option, dipped to 2.80 percent. Thatís below last weekís previous record of
The rate on the 30-year loan has fallen to or matched record-low levels in
13 of the past 14 weeks.
Cheaper mortgages have helped drive a modest but uneven housing recovery
Sales of new and previously occupied homes fell in June but were higher than
the same month last year. Home prices have started to stabilize in many
large markets. And builders are more confident and are putting up more
houses than they have in nearly four years.
Fewer Americans signed contracts to buy homes in June, the National
Association of Realtors said in a separate report Thursday. The groupís
index of sales agreements fell to 99.3, down from Mayís reading of 100.7.
A reading of 100 is considered healthy. The index is 9.5 percent higher than
it was a year ago. Thereís generally a one- to two-month lag between a
signed contract and a completed deal.
Low mortgage rates could also 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 homeowners use
the savings on renovations, furniture, appliances and other improvements,
which help drive growth.
Still, the pace of home sales remains well below healthy levels. Many people
are still having difficulty qualifying for home loans or canít afford larger
down payments required by banks.
The sluggish job market could deter some from making a purchase this year.
U.S. employers added only 80,000 jobs in June, a third straight month of
weak hiring. The unemployment rate was unchanged at 8.2 percent, the
government reported last week. Slower job creation has caused consumers to
pull back on spending.
Mortgage rates have been dropping because they tend to track the yield on
the 10-year Treasury note. A weaker U.S. economy and uncertainty about how
Europe will resolve its debt crisis have led investors to buy more Treasury
securities, which are considered safe investments. As demand for Treasurys
increase, the yield falls.
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 last week.
The fee for 15-year loans rose to 0.7 point from 0.6 the previous week.
The average rate on one-year adjustable rate mortgages rose to 2.71 percent
from 2.69 percent. The fee for one-year adjustable rate loans edged up to
0.5 point from 0.4 point.
The average rate on five-year adjustable rate mortgages jumped to 2.74
percent from 2.69 percent last week. The fee was unchanged at 0.6 point.