US 30-year mortgage rate falls below 5 pct-Freddie

NEW YORK Jan 21 (Reuters) - U.S. home loan rates fell for the third straight week, sending 30-year mortgages below 5 percent for the first time since mid-December, home funding company Freddie Mac said on Thursday.

The average 30-year mortgage rate dropped 0.07 percentage point in the week ended Jan. 21 to 4.99 percent, down from a recent peak of 5.14 percent at the end of last year, it said.

This borrowing cost had fallen as low as 4.71 percent last December, a record dating back to 1971 when Freddie Mac started tracking rates weekly.

Mortgage applications have been rising the past three weeks as home loan rates fell, with buyers rushing to lock in costs before rates rise further and a federal tax credit ends. See story at [ID:nNYS007710].

Freddie Mac FRE.N this month projected 30-year mortgage rates of 5.1 percent in the first quarter, climbing steadily to 6 percent in the fourth quarter.

The bulk of the loan increase has been for mortgage refinancing, however, as a 10 percent unemployment rate and record home foreclosures are keeping many potential buyers out of the market. (Reporting by Lynn Adler; Editing by James Dalgleish)