Rate on 30-Year Fixed Mortgage Inches Down to 4.8%

U.S. mortgage rates fell in the latest week, nudging closer to a recent record low, helped by government efforts to bring rates down to levels that will spur demand and help the hard-hit housing market begin to recover.

CNBC.com

Interest rates on U.S. 30-year fixed-rate mortgages fell to 4.80 percent for the week ending April 23, down from the previous week's 4.82 percent, according to a survey released on Thursday by home funding company Freddie Mac .

Three weeks earlier, mortgage rates were 4.78 percent, which was the lowest since Freddie Mac started surveying them in 1971.

The drop is a glimmer of hope for the U.S. housing market amid otherwise dismal data.

The National Association of Realtors on Thursday said the pace of sales of existing homes in the United States fell 3.0 percent in March to a much lower-than-expected annual rate of 4.57 million units.

More insight into the state of the housing market will emerge on Friday when the U.S. Commerce Department releases March data on new U.S. single-family home sales.

"Although long-term mortgage rates eased slightly this week, ARM rates remain elevated relative to those fixed-rate mortgages," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

The battered U.S. housing market, which is in the midst of its worst downturn since the Great Depression, is both the source and a major casualty of the credit crisis. A recovery for the market could portend a turnaround for the United States, the world's largest economy.

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Low interest rates on mortgages should be pivotal for the U.S. housing market this spring, the peak home buying season. With mortgage rates hovering around record lows and affordability at a record high, potential home buyers already have several good reasons to be house hunting. But many people, who are unemployed or who fear they may lose their job, are not interested in purchasing a home.

The Labor Department on Thursday said the number of U.S. workers filing new claims for jobless benefits rose last week.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled a plan to buy mortgage-backed debt in late November.

The Federal Reserve has set a goal to buy up to $1.25 trillion of agency MBS, $300 billion of Treasuries and $200 billion of agency debt in 2009. The purchases are part of efforts to lower borrowing costs.

Low mortgage rates have and should continue to spur demand for home refinancing loans. Lower monthly payments provide a bit of relief to strapped consumers amid rising unemployment and a shrinking economy.

However, so far, the low rates have had little to no impact on demand for loans to purchase homes. But the Fed hopes lower interest rates on mortgages will change that.

Other Rates Mixed

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.48 percent in the latest week, unchanged from the prior week.

This is the lowest the 15-year fixed-rate mortgage has been since Freddie Mac began tracking it in August 1991.

One-year adjustable-rate mortgages, or ARMs, fell to an average of 4.82 percent from 4.91 percent last week.

Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 4.85 percent, compared with 4.88 percent a week earlier. This is the lowest the 5-year ARM has been since Freddie Mac began tracking it in January 2005.

A year ago, 30-year mortgage rates averaged 6.03 percent, 15-year mortgages were at 5.62 percent and the one-year ARM was at 5.29 percent. A year ago, the 5/1 ARM averaged 5.68 percent.

Lenders charged an average of 0.7 percent in fees and points on 30-year mortgages, up from 0.6 percent the previous week, while they charged an average 0.7 percent in fees and points on 15-year mortgages, up from 0.6 percent the previous week.

The 5/1 ARM fees and points were 0.6 percent, unchanged from the previous week. The one-year ARM fees and points were 0.4 percent, down from 0.7 percent the previous week.

Freddie Mac and its larger sibling, Fannie Mae, were placed under government conservatorship in early September.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.

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